Shares of Vanda Pharmaceuticals Inc. skyrocketed today after the company said the FDA approved its schizophrenia drug Fanapt. Vanda plans to begin shipping the drug to pharmacies later this year. The news sent Vanda shares surging nearly tenfold to $10.00 from $1.08. We purchased the stock at $0.80/share, which translates into a whopping 1150% gain, the best individual gain we have had so far.

VNDA was the very first addition to the ValueHuntr Portfolio. As we discussed in our March 6, 2009 article, our investment in VNDA was a rare win-win scenario because the company, trading below net-cash at the time of our purchase, would have likely been liquidated had the FDA not approved its Fanapt product, which would have resulted in a 100% gain at liquidation.

Fanapt, or iloperidone, was more effective than a sugar pill in controlling symptoms of schizophrenia in clinical testing. The drug is an atypical antipsychotic, a group of relatively new drugs. Other drugs in the group include risperidone, which Johnson & Johnson markets as Risperdal, and Eli Lilly & Co.’s Zyprexa.

Approval for the drug was delayed in July because the Food and Drug Administration concluded Fanapt was too similar to drugs already on the market. The agency also required more testing at the time. The most common side effects for Fanapt in clinical testing were dizziness, dry mouth, fatigue, nasal congestion, sleepiness, low blood pressure, rapid heartbeat, and mild weight gain.

Tang Capital Partners, LP (”TCP”) has ended its proxy contest by withdrawing its nominations of director candidates for election to Vanda’s Board of Directors and its stockholder proposal to liquidate the Company. TCP had previously notified the Company of its intention to solicit proxies for the election of two of its candidates to the Vanda Board at the Company’s 2009 Annual Meeting and for its proposal that the Board take action to liquidate the Company.

Kevin Tang, the managing director of the general partner of TCP, notified Vanda of TCP’s intention not to pursue a proxy contest on May 6, 2009 in an email to Vanda’s Chief Executive Officer, Mihael H. Polymeropoulos, M.D. and Chairman of the Board, Argeris N. Karabelas, Ph.D.