Novartis buys back exclusive US/Canada rights from Vanda Pharmaceuticals for Fanapt in deal worth up to $465 million

USA-based Vanda Pharmaceuticals has entered into an exclusive agreement for Swiss drug major Novartis to buy back commercialization and development rights to Fanapt (iloperidone) in the USA and Canada. Fanapt, an atypical anti-psychotic, was approved by the US Food and Drug Administration earlier this summer for the acute treatment of schizophrenia in adults. The US anti-psychotic market is valued at around $14 billion a year.

Vanda stated that, under an amended and restated agreement, Novartis will make an upfront payment of $200 million to Vanda and a royalty on net sales in this territory. Vanda also has the potential to receive additional payments totaling up to $265 million upon the achievement of certain development and commercial milestones for Fanapt in the USA and Canada. Novartis will be responsible for the further clinical development activities in these territories, including the development and commercialization of a long-acting injectable (or depot) formulation of Fanapt. Novartis also has the option to enter into good faith discussions relating to an agreement for the co-commercialization of Fanapt

Under the terms of its sublicense agreement with Novartis, US firm Titan Pharmaceuticals is entitled to receive royalties on global net sales of Fanapt equal to 8% on annual net sales up to $200 million, and 10% on annual net sales above $200 million. Titan incurs no ongoing expenses associated with this potential future income.

Should Novartis buy Titan?

With the new Vanda deal in place, Novartis is now on the hook to pay Titan those royalties and it may be deemed more financially beneficial for the company to simply purchase Titan, according to Seeking Alpha. That move on the part of Novartis would possibly save the company from having to pay out hundreds of millions of dollars over the years and it would also give the Swiss major Probuphine, Titan's Phase III drug to treat opioid addiction (also in Phase II trials for the treatment of chronic pain), and Titan's ProNeura drug delivery system. Titan, unlike Vanda, has the more vibrant pipeline, when compared to that of Vanda's, and it is possible that Novartis would rather make a buyout play for Titan based on that fact, says Seeking Alpha.