VANDA ANNOUNCES POSITIVE PHASE III RESULTS FOR TASIMELTEON IN THE TREATMENT OF NON-24-HOUR DISORDER Tasimelteon is shown to entrain the master body clock as measured by melatonin and cortisol circadian rhythms Tasimelteo

VANDA ANNOUNCES POSITIVE PHASE III RESULTS FOR TASIMELTEON IN THE

TREATMENT OF NON-24-HOUR DISORDER

WASHINGTON, D.C., December 18, 2012, /PRNewswire/ Vanda Pharmaceuticals Inc. (NASDAQ:VNDA) today announced positive results from the SET

(Safety and Efficacy of Tasimelteon) Phase III study, evaluating tasimelteon, a circadian regulator for the treatment of Non-24-Hour Disorder (Non-24). Tasimelteon succeeded in the primary endpoint of Entrainment of the melatonin (aMT6s) rhythm as

compared to placebo.

Additionally, tasimelteon demonstrated significant improvements across a number of sleep and wake parameters including

measures of total sleep time, nap duration, and timing of sleep. Tasimelteon also showed significant improvements over placebo in the Non-24 Clinical Response Scale (N24CRS) as well as in the Clinical Global Impression of Change (CGI-C), an overall

global functioning scale. These results provide robust evidence of a direct and clinically meaningful benefit to patients with Non-24.

is a serious, rare circadian rhythm disorder that affects a majority of totally blind individuals who lack light perception and cannot entrain (reset) their master body clock to the 24-hour day. Currently there is no approved treatment for Non-24.

Today s results confirm tasimelteon as a strong circadian regulator capable of entraining the master body clock in patients with

Non-24. We are particularly impressed and excited by the magnitude and robustness of the direct clinical benefits to patients, said Mihael H. Polymeropoulos, M.D., President and CEO of Vanda. We believe that tasimelteon can be an

effective and clinically meaningful treatment for patients suffering with this debilitating disorder.

As a person who regularly

experiences the debilitating symptoms of Non-24, these findings are important to me and I think they are important to the blind community as a whole, because they give us hope that a potential new treatment approach is on the horizon, said

Melanie Brunson, Executive Director of the American Council of the Blind.

The SET study was an 84 patient randomized, double-masked, placebo-controlled study in patients with Non-24. The primary endpoints for this study were

Entrainment of the melatonin (aMT6s) rhythm to the 24-hour clock and Clinical Response as measured by Entrainment plus a score of 3 on N24CRS.

Primary Endpoint Results

The SET study also assessed a number of secondary endpoints including Entrainment of cortisol rhythm and a broad range of clinical

sleep and wake parameters. These parameters included improvement in the total nighttime sleep in the worst 25% of nights (LQ-nTST), decrease in the total daytime sleep duration in the worst 25% of days (UQ-dTSD) and midpoint of sleep timing (MoST)

which is derived from a combination of the sleep reported for both nighttime and daytime. CGI-C is a seven-point rating scale of global functioning with lower scores indicating larger improvements.

Secondary Endpoint Results

The results of the SET

study represent the initial data from the tasimelteon Non-24 Phase III development program and demonstrate the multiple benefits of this novel therapy in treating patients suffering from this rare circadian rhythm disorder. In the SET study,

tasimelteon was demonstrated to be safe and well tolerated. Vanda expects to report top-line results from the second Phase III study (RESET) for tasimelteon in Non-24 in the first quarter of 2013. Vanda plans to submit a New Drug Application (NDA)

to the U.S. Food and Drug Administration (FDA) in mid-2013.

We would like to thank our patients, their advocates, investigators, advisors and colleagues for

making this study possible, said Mihael H. Polymeropoulos, M.D., President and CEO of Vanda. We look forward to the successful completion of the Non-24 clinical program.

Non-24 Scale of Clinical Response (N24CRS)

Tasimelteon Development Program for Non-24

The SET study is the first of four clinical studies conducted as part of Vanda s Phase III development program for tasimelteon in the treatment of Non-24. Data from the RESET study, a Phase III study

evaluating the maintenance of entrainment effect of tasimelteon, is expected in the first quarter of 2013. In addition, two safety studies are ongoing to support an NDA filing in the U.S. The tasimelteon Non-24 development program is the largest

conducted to date for any investigational therapy for the treatment of Non-24.

About Non-24-Hour Disorder

Non-24-Hour Disorder (Non-24) is a serious, rare and chronic circadian rhythm disorder that affects a majority of totally blind individuals in the U.S.,

or between 65,000 and 95,000 people. Tasimelteon has been granted orphan drug designation for the treatment of Non-24 in both the U.S. and the European Union. Non-24 occurs almost entirely in individuals who lack the light sensitivity necessary to

entrain, or synchronize, the master body clock in the brain with the 24-hour day-night cycle. Most people have a master body clock that naturally runs longer than 24-hours, and light is the primary environmental cue that resets it to 24-hours each

day. Non-24 sufferers have a master body clock that continually delays, putting them to sleep later and later each day, turning night into day and day into night, until the cycle starts all over again. The sleep condition is highly disruptive,

making it difficult to do well in school, hold down a job or maintain relationships. For more information on Non-24, please visit http://24sleepwake.com/.

Tasimelteon is a circadian regulator in development for the treatment of Non-24. Tasimelteon is a melatonin agonist of the human

MT1 and MT2 receptors, with a 2-4 times greater specificity for MT2. Tasimelteon s ability to reset the master body clock in the

suprachiasmatic nucleus (SCN), located in the hypothalamus, results in the entrainment of the body s melatonin and cortisol rhythms to align to the 24-hour day-night cycle. Tasimelteon is currently in development for both Non-24 and Major

Depressive Disorder (MDD).

Vanda has scheduled a conference call for today, Tuesday, December 18, 2012 at 9 AM ET to discuss the trial results. Investors can call 1-800-901-5231 (domestic) and 1-617-786-2961 (international)

and use passcode 51793839. A replay of the call will be available beginning Tuesday, December 18, 2012, at 11:00 AM ET and will be accessible until Tuesday, December 25, 2012, at 12:00 PM ET. The replay call-in number is 1-888-286-8010 for domestic

callers and 1-617-801-6888 for international callers. The access number is 17591426.

The conference call will be broadcast simultaneously on

Vanda s website, http://www.vandapharma.com. Investors should click on the Investor Relations tab and are advised to go to the website at least 15 minutes early to register, download and install any necessary software. The call will also

be archived on Vanda s website for a period of 30 days, through January 17, 2013.

About Vanda Pharmaceuticals Inc.:

Vanda Pharmaceuticals Inc. is a biopharmaceutical company focused on the development and commercialization of products for the

treatment of central nervous system disorders. For more on Vanda, please visit http://www.vandapharma.com.

President and Chief Financial Officer

Vanda Pharmaceuticals Inc.

Senior Vice President

Makovsky & Company, Inc.

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, project,

target, goal, likely, will, would, and could, or the negative of these terms 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 inability to reach agreement with the FDA regarding Vanda s regulatory approval strategy or proposed path to approval for tasimelteon for the treatment of

Non-24-Hour Disorder; the failure of Vanda s clinical trials to demonstrate the safety and/or efficacy of tasimelteon in the treatment of Non-24-Hour Disorder or Major Depressive Disorder; Vanda s failure to obtain regulatory approval for

tasimelteon for the treatment of Non-24-Hour Disorder or to comply with ongoing regulatory requirements; delays in the completion of Vanda s RESET clinical trial for tasimelteon; and other factors that are described in the Risk

Factors and Management s Discussion and Analysis of Financial Condition and Results of Operations sections of Vanda s annual report on Form 10-K for the fiscal year ended December 31, 2011 which is on file with the

SEC and available on the SEC s website at www.sec.gov. In addition to the risks described above and in Vanda s annual report on Form 10-K and quarterly reports on Form 10-Q, other unknown or unpredictable factors also could

affect Vanda s results. There can be no assurance that the actual results or developments anticipated by Vanda will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, Vanda.

Therefore, no assurance can be given that the outcomes stated in such forward-looking statements and estimates will be achieved.

and verbal forward-looking statements attributable to Vanda or any person acting on its behalf are expressly qualified in their entirety by the cautionary statements contained or referred to herein. Vanda cautions investors not to rely too heavily

on the forward-looking statements Vanda makes or that are made on its behalf. The information in this release is provided only as of the date of this release, and Vanda undertakes no obligation, and specifically declines any obligation, to update or

revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.