) -- Fanapt is falling flat.

First year sales of schizophrenia drug developed by

Vanda Pharmaceuticals

(VNDA) - Get Report

and sold by


(NVS) - Get Report

totaled just $31.4 million, a fraction of what Fanapt was expected to bring in, according to analysts.

Even that $31 million in Fanapt sales for 2010 is artificially high because it includes $20 million in sales recorded in the March quarter, nearly all of which was inventory stocking. If you assume about $1.5 million in true user sales in the first quarter, Fanapt's "real" sales for the year just ended were probably around $12-13 million.

Titan Pharmaceuticals


, which along with Vanda receives royalty payments from Novartis based on quarterly Fanapt sales, reported Friday that Fanapt revenue for the fourth quarter totaled $5.1 million.

That's just $200,000 more in Fanapt sales than Novartis was able to generate in the third quarter, suggesting promotional efforts to push the drug have stalled.

Novartis reported fourth-quarter and 2010 earnings Jan. 27, but didn't break out Fanapt sales because the tiny dollar amount is immaterial to its overall business.

Titan, in its Friday announcement, tried to defend Fanapt's growth stating that average weekly prescriptions in the fourth quarter increased to 1,876 from 1,449 in the third quarter.

Yet last October, Titan said weekly Fanapt prescriptions exiting the September quarter totaled 1,800. If that's true, it means average weekly prescriptions barely grew in the fourth quarter.

Vanda developed Fanapt

and got the drug approved in May 2009. In October 2009,

Novartis paid Vanda $200 million for the right to sell Fanapt in the U.S.

The drug was launched in January. In the early months of Fanapt's launch, it became clear that

doctors were slow to prescribe Fanapt

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, according to IMS prescription tracking data.

Last May,

a negative-leaning summary of Fanapt's clinical data in schizophrenia

was included in the seventh edition of the

Manual of Clinical Psychopharmacology

, published by the American Psychiatric Association. The authors of the manual raised concerns about Fanapt's dosing, side effects and high cost compared to other drugs used to treat patients with schizophrenia.

Fanapt's poor sales performance in 2010 stands in stark contrast to the bullish estimates proffered by analysts in the days before the drug's commercial launch. To cite one example, Jefferies drug analyst Corey Davis forecast 2010 Fanapt sales to hit $104 million, growing to $210 million in 2011 and $303 million in 2013.

Vanda filed a $50 million shelf registration statement this week, leading some retail investors to speculate that the company was seeking to raise money in order to acquire Titan and increase its share of Fanapt revenue.

Given the poor commercial performance of Fanapt in 2010, a more likely scenario to play out in 2011 is that Novartis gives up on the drug. If Novartis returns Fanapt to Vanda, the company will lose an important revenue stream and will need to cash to sell the drug on its own. Buying Titan would be the last item on Vanda's to-do list.

Vanda shares were down 2% to $8.06 while Titan shares were off 7% to $1.55 in Friday trading.

--Written by Adam Feuerstein in Boston.

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Adam Feuerstein writes regularly for In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback;

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