Fanapt Launches in the

Fanapt Launches in the U.S.

ROCKVILLE, MD, January 11, 2010 Vanda Pharmaceuticals (NASDAQ: VNDA) today announced that

Novartis Pharmaceuticals Corporation has launched Fanapt (iloperidone) in the U.S. Fanapt was

approved by the U.S. Food and Drug Administration on May 6, 2009 for the acute treatment of

schizophrenia in adults.

In October 2009, Vanda and Novartis Pharma AG entered into an agreement, pursuant to which Novartis

has exclusive U.S. and Canadian commercialization rights to Fanapt . Under this agreement, Vanda

received an upfront payment of $200 million and is eligible for future payments totaling up to $265

million upon the achievement of certain commercial and development milestones for Fanapt , as well

as royalties based upon net sales. Novartis assumed the commercialization and further clinical

development activities in the U.S. and Canada, including the development and commercialization of a

long-acting injectable (or depot) formulation of Fanapt .

Vanda retains the right to commercialize Fanapt oral and depot formulations outside the U.S. and

Canada. At Novartis option, the parties will enter into good faith discussions relating to an

agreement for the co-commercialization of Fanapt outside of the U.S. and Canada or, alternatively,

Novartis will receive a royalty based upon net sales.

Schizophrenia is a chronic, severe and disabling mental disorder, characterized by profound

disruptions in thinking, affecting language, perception, and the sense of self. It often includes

psychotic experiences, such as hearing voices or delusions. Schizophrenia typically begins in late

adolescence or early adulthood and affects 2.4 million Americans or 1.1% of the adult population.

Fanapt belongs to a class of medications for schizophrenia known as atypical antipsychotics. The

term atypical refers to the different mechanisms of action of second-generation antipsychotics.

The FDA approval of Fanapt was supported by two placebo- and active-controlled short-term (4- and

6-week) trials and safety data derived from more than 2,000 patients. Both trials enrolled patients

who met the DSM-III/IV criteria for schizophrenia. Fanapt was shown to be superior to placebo in

controlling symptoms of schizophrenia across doses of 12 mg to 24 mg per day which is the

recommended daily target dose range. Titration to the target dose of 12 mg per day can be achieved

IMPORTANT SAFETY INFORMATION FOR FANAPT (iloperidone) TABLETS

Fanapt tablets are indicated for the acute treatment of schizophrenia in adults.

Elderly patients are at an increased risk of death when compared with patients who are treated with

a placebo. Fanapt is not approved for the treatment of elderly patients (aged 65 and older) with

psychosis related to dementia.

Serious Side Effects

Fanapt may change your heart rhythm (meaning there is more time between heart beats). Heart

rhythm changes have occurred in patients taking Fanapt and are a risk factor for serious, even

life-threatening medical issues. You should tell your doctor if you have or had heart problems.

Call your doctor right away if you feel faint or have unpleasant feelings of irregular or forceful heart beats as any of these

feelings could be a sign of a rare, but serious side effect that could be fatal.

Very high fever, rigid muscles, shaking, confusion, sweating, or increased heart rate and blood

pressure. These may be signs of a condition called neuroleptic malignant syndrome (NMS), a rare but

serious side effect which could be fatal.

Abnormal or uncontrollable movements of the face, tongue, or other parts of body may be signs of a

serious condition called tardive dyskinesia (TD), which could become permanent.

If you have diabetes or risk factors for diabetes (for example, obesity, family history of

diabetes), or you have unexpected increases in thirst, urination, or hunger, your blood sugar

should be monitored. Increases in blood sugar levels (hyperglycemia), in some cases serious and

associated with coma or death, have been reported in patients taking Fanapt and medicines like it.

Tell your doctor if you have a history of or are at risk for seizures, have liver disease, or if

you are pregnant or intend to become pregnant. Tell your doctor about all prescription and

nonprescription medicines you are taking, since there are some risks for drug interactions.

Lightheadedness or faintness caused by a sudden change in heart rate and blood pressure when rising

quickly from a sitting or lying position (orthostatic hypotension) has been reported with Fanapt.

Decreases in white blood cells (infection-fighting cells) have been reported in some patients

taking antipsychotic agents, including Fanapt. Patients with a history of a significant decrease in

white blood cell (WBC) count or who have experienced a low WBC count due to drug therapy should

have their blood tested and monitored during the first few months of therapy.

Fanapt can increase the level of the hormone prolactin. Tell your doctor if you have signs of high

prolactin levels, such as breast enlargement, breast pain, or breast discharge.

Medicines like Fanapt can impact your body s ability to reduce your temperature. You should avoid

overheating. You should drink fluids so that you do not become thirsty (dehydrated).

Fanapt and medicines like it have been associated with swallowing problems (dysphagia). If you had

or have swallowing problems, you should tell your doctor.

As with many conditions that affect the way you think and feel, thoughts of suicide may occur. If

you get these feelings, seek help immediately from your doctor, or local emergency room.

For males, in the rare event you have a painful or prolonged erection (priapism), lasting 4 or more

hours, stop using Fanapt and seek immediate medical attention.

Fanapt and medicines like it can affect your judgment, thinking, or motor skills. You should not

drive or operate hazardous machinery including automobiles until you know how Fanapt affects you.

The most common side effects include dizziness, dry mouth, feeling unusually tired or sleepy,

stuffy nose, orthostatic hypotension, racing heart beat, and weight gain. The average weight gain

in clinical studies was 5 lbs. If you experience any of these symptoms, talk with your doctor.

When taking Fanapt, you should avoid drinking alcohol, and you should not breastfeed.

If you would like more information, talk with your doctor. You can also visit the Fanapt Web site

at www.Fanapt.com or call Novartis Pharmaceuticals Corporation at: 1-888-NOW-NOVA (1-888-669-6682)

Monday-Friday, 8:30 am 5:00 pm ET.

Vanda Pharmaceuticals Inc. is a biopharmaceutical company focused on the development and

commercialization of clinical-stage products for central nervous system disorders. For more on

Vanda, please visit http://www.vandapharma.com.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Various statements in this release are forward-looking statements under the securities laws.

Words such as, but not limited to, believe, expect, anticipate, estimate, intend, plan,

targets, likely, will, would, and could, and similar expressions or words, identify

forward-looking statements. Forward-looking statements are based upon current expectations that

involve risks, changes in circumstances, assumptions and uncertainties. Important factors that

could cause actual results to differ materially from those reflected in the company s

forward-looking statements include, among others: the extent and effectiveness of the development,

sales and marketing and distribution support Fanapt receives; Vanda s ability to successfully

commercialize Fanapt outside of the U.S. and Canada; delays in the completion of Vanda s clinical

trials; a failure of Vanda s products to be demonstrably safe and effective; Vanda s failure to

obtain regulatory approval for its products or to comply with ongoing regulatory requirements for

its products; a lack of acceptance of Vanda s products in the marketplace, or a failure to become

or remain profitable; Vanda s expectations regarding trends with respect to its costs and expenses;

Vanda s inability to obtain the capital necessary to fund its commercial and research and

development activities; Vanda s failure to identify or obtain rights to new products; Vanda s

failure to develop or obtain sales, marketing and distribution resources and expertise or to

otherwise manage its growth; a loss of any of Vanda s key scientists or management personnel;

losses incurred from product liability claims made against Vanda; a loss of rights to develop and

commercialize Vanda s products under its license and sublicense agreements and other factors that

are described in the Risk Factors section (Part II, Item 1A) of Vanda s quarterly report on Form

10-Q for the fiscal quarter ended September 30, 2009 (File No. 001-34186). In addition to the risks