(Reuters) - Shares of Vanda Pharmaceuticals Inc (VNDA.O) jumped nearly 42 percent on expectations that its sleep disorder drug could reach market earlier than expected after U.S. health regulators said it will review its marketing application within six months.
The drug, tasimelteon, aims to treat a rare sleep disorder called ‘non-24-hour disorder’ that has no approved treatment.
The condition, in which a person’s body clock does not automatically set to the 24-hour day, affects a majority of blind people.
“This signals to us that the FDA views ”Non-24“ as a serious unmet need, (and not just) as another ”insomnia“ treatment,” Jefferies analyst Oren Livnat wrote in a note.
Livnat, who has a “buy” rating on the stock, raised his price target to $13 from $11.
Tasimelteon was tested in two late-stage trials where it fared better than a placebo in resetting the rhythm of the hormone melatonin, which controls sleep cycles.
Vanda is also testing the drug’s safety in two more late-stage trials.
The FDA will announce its decision on the drug by January 31, and has also tentatively scheduled a meeting with independent advisors on November 14 to discuss the drug’s marketing application.
Tasimelteon has an orphan drug status from the FDA - which offers several years of marketing exclusivity for drugs developed for rare conditions - and can command a premium pricing once approved.
Vanda estimates that between 65,000 and 95,000 people are affected by non-24-hour disorder in the United States alone.
The Washington, DC-based company has a schizophrenia drug, Fanapt, on the market. It was approved by the FDA in May 2009.
Vanda shares were up 38 percent to $11.08 on the Nasdaq on Tuesday morning after reaching a high of $11.40.
Reporting by Esha Dey in Bangalore; Editing by Joyjeet Das