Why Are Vanda Pharma Shares Plunging Today?

Vanda Pharmaceuticals Inc VNDA shares are plunging after the company announced Phase 3 trial data of tradipitant in treating the symptoms of gastroparesis. 

• Gastroparesis is a condition that reduces the ability of the stomach to empty its contents. It does not involve a blockage (obstruction).
• The study did not meet its prespecified primary endpoint, the difference between drug and placebo on the severity of nausea from baseline at week 12 of treatment. 
• Both treatment arms showed significant improvements from baseline on nausea and the other core symptoms of gastroparesis.
• Initial exploratory analysis has identified potential confounders that may have masked the beneficial effect of the drug previously observed in the Phase 2 study of tradipitant, including a baseline imbalance of rescue medication use between the two treatment arms.
• Also, the company says that it observed poor compliance with study drug for some patients in the study. 
• When restricting the analysis to patients who did not use rescue medications and adjusting for poor compliance, Vanda identified drug effects, including a significant effect at the prespecified primary endpoint of nausea change at week 12.
• The Phase 3 study also demonstrated that tradipitant is safe and well-tolerated. 
• Patients on tradipitant experienced similar treatment-emergent adverse events as patients receiving placebo. 
• The most common adverse event where tradipitant frequency was higher than placebo was diarrhea.
• Price Action: VNDA shares are down 20.80% at $11.60 during the premarket session on the last check Friday.