After the Food and Drug Administration told Vanda Pharmaceuticals that the company's schizophrenia drug was "not approvable" last July, Wall Street marked the tiny biotech for dead.
The FDA asked for a new clinical trial; Vanda insisted it could change the agency's mind with its existing data. Its shares sank from $4 to 45 cents. A hedge fund, Tang Capital Partners, started a proxy fight to try and get Vanda to liquidate and distribute the proceeds to shareholders.
Then Wednesday night, the FDA announced it was approving the drug, Fanapt, based on data from 3,000 patients. Vanda shares exploded 700% to $8. That's the kind of jackpot that could start getting investors interested in gambling on tiny biotechs again.
But the Vanda story may signal something far more important for investors than just a reminder that biotech stocks can pop: an easier FDA. Both Wyeth ( WYE - news - people ), which is being bought by Pfizer ( PFE - news - people ), and Schering-Plough ( SGP - news - people ), which is being bought by Merck ( MRK - news - people ), were rebuffed last year by the FDA after submitting data for schizophrenia drugs.
Together with the July rejection of Fanapt, it seemed the FDA was setting a higher bar for new antipsychotics, demanding they must not only beat placebo results but also be at least as effective as existing drugs like Seroquel, from AstraZeneca ( AZN - news - people ), and Zyprexa, from Eli Lilly ( LLY - news - people ).
"The inference was that the FDA may be changing its policy and requiring superiority or distinctiveness for new drugs coming to a market that is already crowded," says Jeffrey Lieberman, chairman of psychiatry at Columbia University Medical Center. But the Fanapt approval "would suggest the agency is still doing business as usual."
Lieberman says he is "amazed" the FDA approved the drug. He says the approval is "probably a testament to persistence" on Vanda's part. "There's no harm in having it," he says. "It gives clinicians another option to choose from, but it doesn't really add anything in terms of any substantial advance in efficacy or safety."
Lieberman was the primary investigator for a government-funded clinical trial that showed there was little difference in how long patients stuck with the new class of antipsychotics, like Zyprexa and Risperdal, vs. the older, cheaper variety, such as Haldol. That study, called CATIE, led to soul searching by psychiatrists over how big the advantages of the new drugs were. These antipsychotics are now the best-selling drugs in the U.S., according to IMS Health ( RX - news - people ), a consulting firm.
So much for that new and improved FDA Obama promised in his "CHANGE" message.
The bought and paid for FDA is now even more corrupt and controlled by Big Pharma and the medical industry than ever before in our history. Before you take that next PILL, you better STOP and wonder what it really is in truth and how much harm it really does; because you can be damned sure our government or its representative the FDA will not be looking out for your interest or health. "Money speaks and the rest weep" is the new FDA motto and creed.
How about this for a scary "brave new world" scenario and thought; If the government can get the general population to buy into taking poisons on a grand scale; we can now save the over burdened social security system due to so few people living long enough to ever collect its benefits.
Jeez, how much blind faith people must have in a puppet government ran by greedy special mega international corporate interest? I guess the next step is having the UN save us all from ourselves; since we all know how above board and uncorrupted they are?