Vanda Sleep Drug Data Sedate Investors

A late-stage study of tasimelte meets its primary endpoint but not secondary ones related to sleep maintenance.
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Vanda Pharmaceuticals

(VNDA) - Get Report

announced positive top-line results Thursday from a late-stage study on insomnia drug tasimelte, but the data may not prove compelling enough to rouse potential partners.

Investors, skeptical about the phase III study's missed secondary, sleep maintenance endpoints and the drug's path forward, sent shares of the biotech down 12% in recent trading Thursday.

"The failure of all secondary endpoints of sleep maintenance is clearly disappointing, since this important endpoint was the key to securing a partnership," wrote Citi analyst Lucy Lu, who has a hold rating and a $5 price target for the stock, in a note to investors. "The product attributes (without sleep maintenance) resembles that of Takeda's Rozerem, a $100M drug."

The study met its main goal, improvement in sleep onset through a measurement called latency to persistent sleep (LPS) on nights 1 through 8 of a four-week study in patients with chronic insomnia.

However, the study didn't demonstrate statistically significant improvements in secondary endpoints -- the measure of sleep duration called total sleep time (TST) and wake after sleep onset (WASO), a sleep maintenance measurement.

When the night was broken into thirds, both doses registered a statistically significant improvement in TST during the first third of the night throughout the study and in WASO during the first third of the night on nights 1 through 8. But neither secondary endpoint reached statistical significance in the other thirds of the night or overall.

On a conference call Thursday morning, however, CEO Mihael Polymeropoulos, MD, said that the study enrolled patients who didn't have trouble sleeping in the middle of the night, and "if it's not broke you can't fix it." Polymeropoulos also noted that currently marketed drugs like

Sanofi-Aventis'

(SNY) - Get Report

Ambien do not have proven sleep maintenance on their labels.

However, investors were hoping sleep maintenance might be the key differentiator for the drug, creating partnership potential.

"Since tasimelteon's product attributes will not be competitive without sleep maintenance, we do not believe that the company will find a partner," wrote Citi's Lu. "Securing a partnership is crucial in a marketing-heavy sleep market."

Vanda shares were down 60 cents at $4.39.