Vanda Pharmaceuticals Inc.
- Company Name
- Vanda Pharmaceuticals Inc.
- Stock Symbol
- Class Period
- November 4, 2015 to February 11, 2019
- Motion Deadline
- April 26, 2019
- Eastern District of New York
The complaint charges Vanda and certain of its officers with violations of the Securities Exchange Act of 1934. Vanda is a biopharmaceutical company that focuses on the development and commercialization of products for the treatment of central nervous system disorders. Vanda owns and markets two drugs, Fanapt and Hetlioz. Fanapt is a medication used to treat schizophrenia in adults, and Hetlioz is approved to treat Non-24-Hour Sleep-Wake Disorder.
The complaint alleges that during the Class Period, defendants made false and misleading statements and/or failed to disclose that Vanda was engaged in the off-label promotion of Fanapt and Hetlioz and in misbilling Medicare, Medicaid, and Tricare, and that the FDA had found that Vanda’s promotional materials for Fanapt and Hetlioz were false and misleading, all of which would result in Vanda garnering regulatory scrutiny from the government As a result of this and other information being withheld from the market, the price of the Company’s shares was artificially inflated during the Class Period, with its stock price reaching a high of more than $30 per share.
The truth began to emerge on October 22, 2018, when the FDA sent Vanda a Warning Letter in response to the agency’s review of Vanda’s website, which the FDA had found “false and misleading” due to its failure to disclose the risks of Fanapt and Hetlioz in violation of the Federal Food, Drug and Cosmetic Act. The FDA also raised concerns about the Company’s promotional materials for these drugs. Then, on February 11, 2019, private investment firm Aurelius Value published a report revealing that a qui tam whistleblower lawsuit had recently been unsealed containing allegations of “illegal off-label promotion of both of Vanda’s drugs, Vanda’s participation in a fraud involving doctors writing hundreds of ‘fake prescriptions’ and pocketing cash using Vanda-issued copay cards, falsified documents in internal systems, and resignations of senior executives who refused to participate in illegal activity.” The report also detailed how Vanda had for years fraudulently promoted Fanapt and Hetlioz and engaged in a scheme to defraud the government. On this news, the price of Vanda shares fell 5% to close at $18 per share on February 11, 2019.