Staff Writer

Shares of Vanda Pharmaceuticals Inc. rose and then fell on Thursday as investors tried to digest top-line data from the company's Phase III trial of tasimelteon (VEC-162) in chronic insomnia.

In the study, 322 patients were randomized to receive 20 mg of tasimelteon, 50 mg of tasimelteon or placebo for four weeks. Both doses of the drug hit the primary endpoint by significantly improving short-term sleep onset, according to latency to persistent sleep (LPS) data measured by polysomnography on the first and eighth nights.

Specifically, while patients in the trial normally spent more than two hours trying to get to sleep, 20 mg of tasimelteon improved LPS by 45 minutes and 50 mg of tasimelteon improved LPS by 46.4 minutes (p < 0.001 for both), while placebo patients reported a 28.3 minute improvement.

Those improvements persisted through measurements taken on the 22nd and 29th nights of the four-week trial. The long-term sleep onset analysis, a secondary endpoint, showed that the lower dose improved LPS by 49.4 minutes (p < 0.001) and the higher dose improved LPS by 45.1 minutes (p = 0.016), compared to a 33.9 minute improvement in the placebo group.

Mihael Polymeropoulos, president and CEO of Rockville, Md.-based Vanda, told investors during a conference call that the LPS data "may be [some] of the best" in the insomnia market.

Analyst David Amsellem, of Friedman, Billings, Ramsey & Co. Inc., agreed that tasimelteon's effect on sleep onset probably will be enough to eventually get an approval for insomnia - but he raised concerns that the drug is "not differentiated from what's available" and that the "path forward commercially is not clear."

The insomnia market is dominated by GABA modulators like Lunesta (eszopiclone, Sepracor Inc.) and Ambien CR (zolpidem tartrate extended-release, Sanofi-aventis Group). Yet the class is troubled by next-day cognitive problems and abuse potential.

Last year, the FDA requested that all manufacturers of sedative-hypnotic insomnia drugs strengthen their labeling language concerning complex sleep-related behaviors such as sleep-driving and sleep-eating, and concern about such side effects was at least partially responsible for Neurocrine Biosciences Inc.'s second approvable letter for the GABA-modulating insomnia drug indiplon. (See BioWorld Today, Dec. 14, 2007.)

Tasimelteon works by a different mechanism. It's a melatonin agonist designed to bind the MT-1 and MT-2 receptors to modulate a patient's circadian rhythm.

"The suspicion of many experts in the field suggested that chronic insomnia is a disorder of the sleep-wake cycle and it is not only to be addressed by . . . hypnotics that we have today, but rather with an eloquent and precise mechanism of circadian regulation," Polymeropoulos said.

While tasimelteon was well tolerated in the trial, it is not the first melatonin drug for insomnia. Rozerem (ramelteon, Takeda Pharmaceutical Co. Ltd.) also binds the MT-1 and MT-2 receptors and has built up about a $100 million market in sleep onset.

Polymeropoulos noted the low bioavailability and inconsistent performance of Rozerem, but he also emphasized the importance of addressing both sleep onset and sleep maintenance, specifically pointing out that sleep maintenance is a component for about two-thirds of insomniacs.

That's where investors began to scratch their heads.

In the Phase III trial, tasimelteon did not achieve statistical significance on the secondary endpoints of total sleep time (TST), a measure of sleep duration, and wake after sleep onset (WASO), a measure of sleep maintenance.

However, Vanda said a retrospective subset analysis focusing on the first third of an eight-hour night resulted in statistically significant improvements in short-term and long-term TST at both doses as well as short-term WASO at the lower dose.

Amsellem was not impressed with the subset analysis and said he felt the company was trying to convince investors of an effect that was "not really there."

Polymeropoulos maintained that since the trial was designed to measure sleep onset and enrolled patients who have trouble getting to sleep, most of those patients experienced sleep disruption early in their sleep cycle rather than later. "If something is not broken, you cannot fix it," he said, explaining why the data did not hit statistical significance when the full night was taken into consideration.

In a previous Phase III trial for transient insomnia, tasimelteon significantly improved LPS as well as TST and WASO. (See BioWorld Today, Nov. 16, 2006.)

During the conference call, some analysts questioned Vanda's decision to focus on sleep onset rather than sleep maintenance, but Polymeropoulos replied that "you cannot answer all questions around a compound in one study" and that sleep maintenance requires longer, larger trials than sleep onset.

Moving forward, Vanda plans to meet with the FDA this summer to discuss a clinical development plan to support approval for circadian rhythm sleep disorders. Approval in insomnia likely would require a 12-week trial and a trial in elderly patients. The company also is in discussions with potential partners.

But progress with tasimelteon is "contingent" on FDA approval of schizophrenia tablet iloperidone, which is under review with a decision expected July 27. Amsellem called the drug the "main driver" of Vanda's shares and is bullish on its expected approval. (See BioWorld Today, Sept. 28, 2007.)

Shares of Vanda (NASDAQ:VNDA fell 79 cents, or 15.8 percent, to close at $4.20 on Thursday.

Published  June 27, 2008