WASHINGTON, D.C. ( TheStreet) -- Vanda Pharmaceuticals (VNDA) has awarded a $500,000 bonus to a mysterious "regulatory consultant" following the U.S. Food and Drug Administration acceptance of the approval submission for tasimelteon, the company's sleep disorder drug candidate.
The "regulatory consultant" -- who Vanda does not identify -- will also pick up a $2 million bonus from the company if FDA approves tasimelteon. Low probability of that happening, but still, Vanda's hired gun has two million reasons to give tasimelteon's approval his best shot.
It's not unusual for small companies to seek outside help to better deal with FDA on drug approval issues. What is weird is paying the outside help a $500,000 bonus just because FDA accepted your drug filing -- a routine and expected occurrence.
Here's how Vanda describes its engagement with the consultant in its first-quarter SEC filing:The Company has engaged a regulatory consultant to assist the Company's efforts to prepare, file and obtain FDA approval of an NDA for tasimelteon. As part of the engagement and subject to certain conditions, the Company would be obligated to make milestone payments upon the achievement of certain milestones, including $0.5 million in the event that the tasimelteon NDA is accepted for filing by the FDA and $2.0 million in the event that the tasimelteon NDA is approved by the FDA. In addition to consulting fees and milestone payments, the Company is obligated to reimburse the consultant for ordinary and necessary business expenses incurred in connection with the engagement. The Company may terminate the engagement at any time upon prior notice; however, subject to certain conditions, the Company will remain obligated to make some or all of the milestone payments if the milestones are achieved following such termination. And here's Vanda confirming payment of the $500,000 bonus in its second-quarter SEC filing posted Wednesday: As a result of achieving this regulatory milestone
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