Why Vanda Pharmaceuticals Inc. Shares Skyrocketed

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Vanda Pharmaceuticals , a biopharmaceutical company that develops therapies to treat central nervous system disorders, skyrocketed as much as 90% after briefing documents posted on the Food and Drug Administration's website today painted experimental sleep therapy tasimelteon in positive light.

So what: According to the report on the FDA's website, reviewers on the FDA panel -- which are scheduled to vote on a recommendation for or against approval on Thursday -- noted in documents released today that tasimelteon helps blind people sleep. Most people have no trouble staying on a normal sleep pattern as our bodies adjust to the sun and use that as our gauge of when to sleep. Blind people don't have this luxury, and thus have a difficult time maintaining normal sleep patterns, which tasimelteon hopes to cure (also known as non-24-hour disorder).

Now what: Briefing documents often give us a good indication of where the FDA panels' vote will lean -- and all indications would be in favor of recommendation thus far. Of course, this doesn't mean the FDA has to follow the recommendation of its advisory panel or that Vanda will necessarily have any success in launching the drug, but it does move the company along to the next crucial step of the process. Vanda's been here before, and its schizophrenia drug Fanapt hasn't performed nearly as well as most analysts on Wall Street had expected, so I might think twice about considering Vanda at these lofty levels, which seem to be driven more by emotional trading today than fundamental logic.

Growth isn't a question for this stock
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The article Why Vanda Pharmaceuticals Inc. Shares Skyrocketed originally appeared on Fool.com.

Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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