UPDATE 1-Vanda gets FDA not-approvable letter on iloperidone

Mon Jul 28, 2008 8:30am EDT

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July 28 (Reuters) - Vanda Phamaceuticals Inc (VNDA.O), received a not approvable letter from U.S. regulatory authorities for its treatment of schizophrenia, sending its shares tumbling before the opening bell.

The U.S. Food and Drug Administration issued the letter over concerns of efficacy of iloperidone, Vanda's atypical antipsychotic drug, in comparison with Johnson & Johnson's (JNJ.N) risperidone, in patients suffering from schizophrenia.

The company plans to discuss the decision further with the FDA.

Vanda said the FDA required additional data on the drug's efficacy compared to a placebo including an active comparator such as Eli Lilly and Co's (LLY.N) olanzapine or risperidone.

The FDA also required additional safety data of iloperidone's dose range of 20 milligram to 24 milligram a day.

The brokerage Caris started Vanda with a "buy" rating in May, expecting a positive decision from the FDA on iloperidone (Fanapta).

Shares of Vanda Pharmaceuticals were down 55 percent at $1.50 in trading before the bell, after closing at $3.36 Friday on Nasdaq. (Reporting by Vidya L Nathan in Bangalore; Editing by Bernard Orr)

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