Vanda Pharmaceuticals Inc. (NASDAQ: VNDA) saw its stock price surge up to 44% in after-hours trading on February 23, 2026, following the U.S. Food and Drug Administration's (FDA) approval of its new drug, BYSANTI (milsaperidone). The drug is approved for the treatment of Bipolar I manic episodes and Schizophrenia in adults.
This marks Vanda's second FDA approval in under two months, following the December 2025 approval of NEREUS. BYSANTI is classified as a New Chemical Entity (NCE), granting it strong patent protection that extends to 2044, shielding the company from generic competition for nearly two decades.
The drug's approval process was expedited because its active mechanism is closely related to iloperidone, sold as Fanapt. Milsaperidone converts to iloperidone in the body, allowing Vanda to leverage over 100,000 patient-years of existing safety and efficacy data. BYSANTI targets dopamine and serotonin pathways and has strong alpha-adrenergic binding, potentially making it a preferred option for patients with acute agitation.
Despite the celebratory market reaction, analysts express caution. The rally is suspected to be partly driven by a technical short squeeze, as Vanda carried a significant short interest of over 3.2 million shares prior to the news. Critics argue that BYSANTI's clinical profile is largely redundant with the existing Fanapt, which may create commercial hurdles with cost-conscious insurance payers in a market saturated with generic alternatives.
Vanda's underlying financial health raises additional concerns. The company reported a staggering net loss and an -84% EPS surprise for Q4 2025, alongside a $113.7 million non-cash charge related to tax assets. Cash reserves have dwindled by over $100 million in the past year, potentially forcing the company to consider a secondary stock offering to fund BYSANTI's commercial launch, scheduled for Q3 2026.
Looking ahead, Vanda is conducting trials for BYSANTI as a once-daily add-on treatment for major depressive disorder, with results expected by the end of 2026. A positive outcome could significantly expand the drug's addressable market.
