Vanda Pharmaceuticals Inc said a late-stage trial of its drug to treat a rare disorder affecting blind people met the main goal of showing improvement over a placebo, sending its shares up as much as 37 percent.
The drug tasimelteon is being tested for non-24-hour disorder, a rare and chronic circadian rhythm disorder for which there is no approved treatment, Vanda said in a statement.
The disorder, in which a person's body clock does not automatically set to the 24-hour day thereby affecting sleep cycles, affects a majority of blind people.
The main goal of the trial was to reset the rhythm of the hormone melatonin, which controls sleep and wake cycles, to a 24 hour day-night cycle.
The goal also included measuring patients' clinical response to the drug compared with a placebo.
The study, which enrolled 84 patients, was the first of four studies that form Vanda's late-stage program for the drug. The drug was well tolerated in the study.
Vanda said it expects results from the second study in the first quarter of 2013, and plans to submit a marketing approval application to the U.S. health regulator in mid 2013.
Shares of the company were up 28 percent at $4.12 in heavy volume trade on Tuesday morning on the Nasdaq. Around 2.2 million shares had changed hands by 1007 ET - more than eight times the stock's average moving volumes.
Tasimelteon received orphan drug status from the U.S. Food and Drug Administration in 2010 and from the European Commission in 2011.
The FDA grants orphan drug status to drugs or biologics that treat a condition affecting less than 200,000 Americans, giving the drugmaker marketing exclusivity for seven years in the United States.
In Europe, the status is granted to drugs treating a condition affecting no more than 5 in 10,000 people in the European Union, and carries a 10-year marketing exclusivity.
Tasimelteon is also being developed as a treatment for Major Depressive Disorder.
Vanda's schizophrenia drug Fanapt, which is marketed and sold in the United States by Novartis AG, received a negative opinion earlier this month from the European Medicines Agency.
(Reporting by Esha Dey and Vrinda Manocha in Bangalore; Editing by Roshni Menon)