With Vanda Pharmaceuticals (VNDA, Financial) trading near 52 week lows, I decided to take a closer look into the company to see if it is an attractive opportunity. Although the company is not profitable, VNDA does have some great assets that seems like are going unnoticed by the market.
For some background, the company just recently began generating revenues and is still not profitable. With the brief valuation history we have, it seems like VNDA is undervalued on a P/B basis. VNDA’s current P/B ratio is 3.5 and it has averaged 5.1 over the past 5 years with a high of 13.3 and low of 0.3. VNDA’s current P/S ratio is 4.4 and it has averaged 6.0 over the past 2 years with a high of 7.5 and low of 4.4. VNDA isn’t expected to post a profit in 2011 so there is no trailing P/E metric.
Analysts share similar feelings about the stock. The consensus price target for the analysts who follow VNDA is $8.50. That is upside of nearly 80% from today’s levels and suggests that the stock is undervalued levels and has plenty of room to run.
The story here isn’t in the revenues. The big source of value here is the balance sheet. The company has about $180 million in cash and marketable securities with a market cap of $133 million. That suggests that the rest of the company’s assets have 0 or negative value, highly unlikely with the company having one drug on the market, Fanapt, and one not too far away, Tasimelteon.
Fanapt is one of the reasons the stock is trading near 52 weeks lows as prescriptions have been below expectations. However, it seems like this trend is changing. Vanda reported third quarter 2011 results on November 4. The company noted that Fanapt prescriptions are growing at a healthy clip. As reported by IMS, Fanapt prescriptions reached 33,000 in the third quarter of 2011. This represents a 10% increase over second quarter 2011 prescriptions. Vanda also noted that the tasimelteon Non-24-Hour Sleep-Wake Disorder (N24HSWD or Non-24) program continues to advance with two new studies initiated to support registration and is on track for a mid 2013 New Drug Application (NDA) filing.
Vanda also is working on bring tasimelteon to market for a different indication. Vanada said that the tasimelteon Major Depressive Disorder (MDD) Phase IIb/III study (MAGELLAN) was initiated in September 2011. Vanda expects to report results from the MAGELLAN study in the first half of 2013.
Technically, the stock doesn’t look pretty but it may be bottoming out. VNDA was stable for most of the first half of last year before falling apart in early August and continuing lower since then. The stock has fallen from over $7 a share to below $4.50 before bouncing slightly higher to its current level of about $4.75. The stock is below its 50 day moving average, which sits at $4.90, and its 200 day moving average which sits at $6.17. Resistance on the upside includes $4.75 followed by $5.00 and $5.25. On the downside, $4.50, just below its 52 week low, should provide solid support.
For some background, the company just recently began generating revenues and is still not profitable. With the brief valuation history we have, it seems like VNDA is undervalued on a P/B basis. VNDA’s current P/B ratio is 3.5 and it has averaged 5.1 over the past 5 years with a high of 13.3 and low of 0.3. VNDA’s current P/S ratio is 4.4 and it has averaged 6.0 over the past 2 years with a high of 7.5 and low of 4.4. VNDA isn’t expected to post a profit in 2011 so there is no trailing P/E metric.
Analysts share similar feelings about the stock. The consensus price target for the analysts who follow VNDA is $8.50. That is upside of nearly 80% from today’s levels and suggests that the stock is undervalued levels and has plenty of room to run.
The story here isn’t in the revenues. The big source of value here is the balance sheet. The company has about $180 million in cash and marketable securities with a market cap of $133 million. That suggests that the rest of the company’s assets have 0 or negative value, highly unlikely with the company having one drug on the market, Fanapt, and one not too far away, Tasimelteon.
Fanapt is one of the reasons the stock is trading near 52 weeks lows as prescriptions have been below expectations. However, it seems like this trend is changing. Vanda reported third quarter 2011 results on November 4. The company noted that Fanapt prescriptions are growing at a healthy clip. As reported by IMS, Fanapt prescriptions reached 33,000 in the third quarter of 2011. This represents a 10% increase over second quarter 2011 prescriptions. Vanda also noted that the tasimelteon Non-24-Hour Sleep-Wake Disorder (N24HSWD or Non-24) program continues to advance with two new studies initiated to support registration and is on track for a mid 2013 New Drug Application (NDA) filing.
Vanda also is working on bring tasimelteon to market for a different indication. Vanada said that the tasimelteon Major Depressive Disorder (MDD) Phase IIb/III study (MAGELLAN) was initiated in September 2011. Vanda expects to report results from the MAGELLAN study in the first half of 2013.
Technically, the stock doesn’t look pretty but it may be bottoming out. VNDA was stable for most of the first half of last year before falling apart in early August and continuing lower since then. The stock has fallen from over $7 a share to below $4.50 before bouncing slightly higher to its current level of about $4.75. The stock is below its 50 day moving average, which sits at $4.90, and its 200 day moving average which sits at $6.17. Resistance on the upside includes $4.75 followed by $5.00 and $5.25. On the downside, $4.50, just below its 52 week low, should provide solid support.
