Player Avatar zzlangerhans (99.85) Submitted: 8/4/2011 7:01:18 PM : Outperform Start Price: $6.80 VNDA Score: -57.17

If you're looking around for falling knives to catch, may I recommend Vanda? The stock can never get any liftoff because royalties from their single product Fanapt have plateaued under 1M/quarter, and their pipeline consists of a single medication in development for N24SWD. Don't ask.

Of course, some dingbat at Novartis saved Vanda from certain destruction by agreeing to pay 200M for the rights to Fanapt, in one of the dopiest mis-steps by big pharma I've seen. The lion's share of that cash, 188M, remains in Vanda's coffers as of the end of Q2. At the close today, Vanda's market cap was 190M. It's certainly possible that continuing broad market collapse will drag Vanda's cap way below cash. It happened in 2009 to a lot of biotechs and it's happening now to companies like Orexigen and Transcept. But if you bought a basket of those beaten down cash flush biotechs in 2009, you'd have been sitting very pretty a year later.

Vanda has bounced off cash a number of times and I've logged wins on the stock about 12 times in both directions over the last couple of years. Strangely, I've never actually bought the stock. Vanda has so little future with their current line-up that I'd be hesitant to risk real money unless the cash-cap discrepancy became extreme. Vanda always has the potential to pull an Insmed, blowing their cash hoard on a questionable acquisition.

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