WTF? Regulatory Victory for Vanda's Iloperidone after FDA U-Turn

Does the approval of Vanda's iloperidone (now given the 'just for you, crazy sportsfan!' name of Fanapt)--deemed Not Approvable by FDA only nine months ago--signal a shift at the agency around use of comparative effectiveness considerations in approval decisions?

The atypical antipsychotic was approved yesterday for acute treatment of adults with schizophrenia, and marks a significant turnaround from last July. As we wrote then:

The company and its rejected investigational atypical antipsychotic drug iloperidone appear to be a marker in the ongoing debate over whether FDA is increasingly using a comparative efficacy standard when considering new drug approvals.

There was plenty of reason to draw that conclusion. Though Vanda said FDA deemed the drug effective against placebo and having similar efficacy to Pfizer's Geodon, it was concerned about how the drug fared against other comparators, specifically Lilly's Zyprexa or J&J's Risperdal. It also wanted more safety data on the drug's higher, 24mg, dose. The agency was requiring further studies, Vanda said.

Remarks by FDA's 'dean of the drug approval process' Bob Temple at an Institute of Medicine meeting only days later seemed to support the notion that comparative effectiveness was becoming a standard hurdle in certain crowded drug classes. He clarified those remarks in an interview with RPM Report's Ramsey Baghdadi a few days later.

“At the IOM, I was explaining what I perceive drug companies to be perceiving and doing, not describing an FDA standard. That is what I was referring to when I said that ‘It’s getting harder to develop the third, fourth, fifth, and sixth member of a class of drugs because when there’s a generic available [within a class], people are inclined to use the cheap one. ...

"It seems apparent that in my statement I was referring to my impression of what companies are doing to have a commercially viable product when there is a generic available for the drug class, and was not referring to any FDA requirement. In most settings, especially for symptomatic treatments, we do not get or ask for comparative data and are perfectly willing to approve a drug that is shown effective."

And in the end, FDA didn't require the kind of large and expensive head-to-head trial that seemed on the cards for Vanda. In September 2008 Vanda reported it had met with FDA to make its case, and that it would file a complete response to FDA's letter. In November, the agency accepted the resubmitted NDA with a decision deadline of May 6, 2009.

It has been far from smooth sailing for Vanda in the meantime. The company did some December restructuring and earlier this year has spent time fending off activist shareholder and 15% Vanda owner Kevin Tang, who proposed back in February to install himself and a colleague at Tang Capital Management on Vanda's seven-member board, presumably to facilitate the liquidation of the company that he has been calling for. The situation escalated only a month ago (See The Pink Sheet Daily for details.).

And yesterday came the approval--hardly a nuisance for Tang, considering the biotech's shares were up more than 800% (yes, EIGHT HUNDRED, that's not a typo) in after-hours Nasdaq trading. Maybe he'll send flowers. (UPDATE: Vanda says Tang has formally withdrawn his proposal to replace the board and call for a shareholder vote on liquidation. Still no word on flowers.)

So what on earth has changed? Vanda's case to FDA must have been convincing. Today the company is trumpeting Fanapt's mild effects on weight in a space where weight gain is a significant issue, and the way patients often switch between antipsychotics--making any safe and effective option worth having.

Does that explain the U-turn? Given the stock's movement, clearly few investors were betting on a happy FDA outcome for Fanapt. Perhaps more complex, political forces are at work?

image from flickr user mag3737 used under a creative commons license.