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https://ml.globenewswire.com/Resource/Download/9ee5bd01-bdbc-43f7-af2d-e4c34004b336
Dear Members of the Board:
A fund managed by Butler Hall Capital LLC, ("Butler Hall", "we" or "our") with current ownership of 350,000 shares of Vanda Pharmaceuticals Inc. ("Vanda" or the "Company"), has issued an open letter to the Company's board of directors (the "Board") regarding the potential bid for Vanda submitted by Future Pak, LLC ("Future Pak"). Future Pak has submitted a bid to acquire the Company without a financing contingency for a price that is 79.0%-91.4% above Vanda's closing price as of April 16th, 2024 and has indicated various ways to improve the offer including "a potential increase in the cash consideration" [1]. While we agree with the Board that the stock is significantly undervalued given the combination of its fortress balance sheet ($6.75/share of net cash), newly acquired Ponvory assets (which the Company paid $1.75/share for) and the $192.6 million of revenues in 2023 from its existing portfolio [1], we do not believe the Board has earned the right to outright reject such an offer. Moreover, the refusal to engage in a discussion leaves us extremely concerned that such actions will impair our investment in the Company. The Board should immediately form an independent special committee to engage with Future Pak and run a full sales process to achieve the highest value for shareholders. We believe any failure to do so would be a clear disregard of the Board's fiduciary duty to the Company's shareholders.
We believe the Board's actions over the past several years have led to significant value destruction and a stock that trades well below its net cash balance. We think these actions have left Vanda's management and the Board with no credibility as evident by the stock's anemic performance, specifically down 52.9% and 42.9% in 2022 and 2023, respecƟvely. Further, the poor equity performance has coincided with a period in which the management team has significantly enriched themselves. For example, Dr. Mihael Polymeropoulos, the Chairman of the Board and the Chief ExecuƟve Officer ("CEO") of the Company, has received approximately $40 million in compensaƟon over the past 10 years [2] . When considering that Vanda's stock has declined by approximately 83% in just the past five years and has significantly underperformed the indices highlighted in its last form 10-K filing, the compensaƟon of certain members of management appears excessive to us [3]. It also leads us to quesƟon the real reason why such a substanƟal offer was rejected and whether the Board is acƟng to enrich themselves rather than to maximize shareholder value.
Posted In: VNDA
