While Oppenheimer doesn’t see the Phase 3 stumble of VQW-765 as highly detrimental to Vanda Pharmaceuticals, the analyst nevertheless believes the stakes are now higher for the company’s planned Q4 readout for Nereus in GLP-1-induced vomiting.
Vanda Pharmaceuticals is suspending the development of a social anxiety drug licensed from Novartis after the drug showed no significant benefit in a late-stage study.
The investigational drug, called VQW-765, failed to significantly ease distress versus placebo in patients with social anxiety disorder during a social stress test, according to an announcement on Wednesday. The analysis focused on female participants, for whom the drug was previously found to be more effective.
“This was a clean miss, not a near miss,” Oppenheimer analysts told investors in a Wednesday note.
Vanda has decided to put the VQW-765 program on hold “pending further analysis of the full dataset,” the biotech said.
The Phase 3 study, called VP-VQW-765-3201, enrolled 546 adults with social anxiety disorder deemed to have elevated anxiety levels at baseline, as measured by validated scales. After receiving either VQW-765 or placebo, participants were asked to go through a standardized social stress test that requires them to prepare and deliver a presentation to a panel. The study’s primary outcome was distress and nervousness during the stress test in female participants, assessed using a self-reported tool, according to Vanda’s release.
VQW-765 is a small-molecule partial agonist of the alpha 7 nicotinic acetylcholine receptor, the activation of which could help alleviate symptoms of anxiety and depression. Vanda picked up the drug candidate in a December 2014 settlement agreement with Novartis regarding certain disputes over the antipsychotic drug Fanapt. Alongside a $25 million equity investment, the pharma granted Vanda an exclusive worldwide license to VQW-765, which at the time was called AQW051.
Phase 2 data published in July 2025 showed that patients on VQW-765 experienced lower self-reported anxiety during a standard social stress test, though the drug’s effect in the overall study population fell short of statistical significance. Stratifying by sex, results showed that VQW-765 was more effective in females, in whom the anxiety-easing effect was significant; VQW-765’s benefits in males remained non-significant.
“We are disappointed that Study 3201 did not confirm the earlier Phase II findings for VQW-765 in patients with social anxiety disorder,” Vanda CEO Mihael Polymeropoulos said in a prepared statement on Wednesday.
Analysts at Oppenheimer do not expect the Phase 3 miss to be highly detrimental to Vanda. VQW-765 “sat only in our bull case, so there is no change to our estimates” for the biopharma, the firm said. Oppenheimer continues to rate the biotech at outperform, suggesting it expects Vanda to deliver high returns for investors.
Still, the VQW-765 pause is likely to add “pressure to the rest of the portfolio,” Oppenheimer said. Two of the three late-stage readouts the firm was keeping tabs on have already dropped, the analysts noted. The first came in September, when Hetlioz met the primary endpoint of helping patients to fall asleep faster in a Phase 3 study of delayed sleep-wake phase disorder. The second was VQW-765, a “negative” for Vanda, according to Oppenheimer.
The third late-stage readout that the analysts have their eye on is for Nereus—also known as tradipitant—an oral motion-sickness drug that received approval in late December 2025. Vanda is now testing Nereus for GLP-1-induced vomiting. The biotech launched a Phase 3 trial in April, with topline data slated for the fourth quarter.
Phase 2 data reported in November last year showed that tradipitant significantly lowered the proportion of patients with vomiting—the trial’s primary endpoint—as compared to placebo. The study involved 116 patients who were pretreated with tradipitant or placebo before being given a 1-mg injection of Novo’s Wegovy.
Aside from the trio of late-stage readouts, Oppenheimer said Vanda’s “near-term story” will also now depend on launch execution for the schizophrenia and bipolar I disorder drug Bysanti, which notched regulatory clearance in February, and the FDA’s verdict for Quimilza in generalized pustular psoriasis expected by mid-December.
