SecProbe.io

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Mail Stop 6010

									January 27, 2006

Mihael H. Polymeropoulos, M.D.
Vanda Pharmaceuticals Inc.
9620 Medical Center Drive - Suite 201
Rockville, MD  20850

Re:  	Vanda Pharmaceuticals Inc.
Form S-1 Registration Statement
	File No. 333-130759

Dear Dr. Polymeropoulos:

      We have reviewed your filing and have the following
comments.
Where indicated, we think you should revise your document in
response
to these comments.  If you disagree, we will consider your
explanation as to why our comment is inapplicable or a revision is
unnecessary.  Please be as detailed as necessary in your
explanation.
In some of our comments, we may ask you to provide us with
supplemental information so we may better understand your
disclosure.
After reviewing this information, we may or may not raise
additional
comments.

      Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects.  We welcome
any questions you may have about our comments or on any other
aspect
of our review.  Feel free to call us at the telephone numbers
listed
at the end of this letter.

Comments applicable to the entire filing

1. We note that your filing contains numerous omissions throughout
the prospectus which relate to the offering price range or the
number
of shares you will sell.  These omissions include but are not
limited
to:

* Summary Financial Data
* Use Of Proceeds
* Capitalization
* Dilution
* The Option Grants Table
* Shares Eligible For Future Sale
* The Principal Stockholders Table
* Description of Capital Stock

 Rule 430A requires you to include this information in your filing
based upon an estimate of the offering price within a bona fide
range
you disclose on the cover page and based upon an estimate of the
number of shares you will sell.  We consider a bona fide range to
be
$2 if the price is under $20 and 10% if it is above $20.  You
should
include the required information in an amendment prior to
circulating
a "red herring" prospectus.

2. Provide us with copies of all the graphic, photographic or
artistic materials you intend to include in the prospectus prior
to
its printing and use.  Please note that we may have comments.
Please
also note that all textual information in the graphic material
should
be brief and comply with the plain English guidelines regarding
jargon and technical language.

3. Although your exhibit index indicates that you are seeking
confidential treatment for a number of exhibits, you do not appear
to
have filed an application for confidential treatment.  Please note
that Rule 406 of Regulation C specifies that the application is to
be
filed at the same time the registration statement is filed.
Please
file the application as soon as possible.  We will not be in a
position to accelerate effectiveness of your registration
statement
until all issues relating to your confidential treatment request
have
been resolved.

4. In a number of places in your document you have used technical
jargon that is not likely to be understood by your readers.
Technical jargon should not appear in the forefront of the
prospectus.  Please refer to Rule 421 of Regulation C.  In the
remainder of the prospectus you should minimize the use of jargon.
If you cannot convey information without using jargon, please
explain
what the jargon means at the first place the terms appear.  Here
are
some examples of technical jargon that needs to be replaced:

* Small molecule product candidates
* Differentiated new therapy
* Atypical antipsychotic
* Pivotal Phase III trial
* Melatonin agonist
* Injectable depot formulation

To the extent that these terms cannot be replaced by suitable
alternatives, please revise to explain the meaning of these terms
the
first time each one is used.

5. You have created a number of acronyms for use in this document
that are not likely to be familiar to your readers.  The use of
acronyms is a convenience for the writer, but it forces readers to
learn a new vocabulary in order to understand the disclosure in
your
document.  Please delete all of the acronyms except those which
can
be commonly found in general interest publications.  Examples of
acronyms that should be deleted include:

* PG
* WASO
* CRSD
* NCE
* SNP
* PANSS
* BPRS
* LOCF
* MMRM

Prospectus Summary

6. In the last paragraph of page 1, the last paragraph of page 2,
the
first paragraph of page 3 and the fourth paragraph of page 3 you
present statistical and market share information related to your
proposed products.  Please provide us with a copy of the
document(s)
containing the information you are relying on as support for these
statements.  Mark the copy of the document to show the location of
each piece of information you are relying on.  Provide similar
factual support for all similar claims made throughout the
registration statement.  We may have additional comments after
reviewing the supporting documents.

7. In the third full paragraph of page 2 you refer to "our market
research."  Please provide us with a copy of the research you are
referring to.  It should be marked to show the location of the
information you are citing.  We may have further comment after
reviewing the documentation.

8. We note your statement that you plan to partner with a global
pharmaceutical company for the development and commercialization
of
VEC-162 worldwide.  If you have not yet identified a partner,
please
disclose this information here and in the "Business" section of
your
document.  Also, disclose that Bristol Meyers Squibb has the right
to
commercialize VEC-162 on its own if you have not entered into a
partnering arrangement after the completion of your Phase III
program.

9. Similarly, in the summary discussion of the risks associated
with
your business, disclose that your agreements with Novatis provides
Novartis with the ability to terminate your agreements if you fail
to
meet development or commercialization milestones and that your
agreement with Bristol Meyers Squibb allows Bristol Meyers Squibb
to
commercialize VEC-162 on its own if you have not entered into a
partnership arrangement.

10. Supplementally explain why you believe your PG expertise is
unique and how it will provide you with preferential access to
compounds discovered by other pharmaceutical companies and how it
will allow you to shorten the drug development timeline relative
to
other traditional approaches.

Summary consolidated financial data, page 6

11. Please expand your disclosures in the introductory paragraph
to
clarify that in addition to the pro forma balance sheet you
include
pro forma net loss per share data.

Risk Factors - page 8

We face substantial competition which may result in others
developing
or commercializing products before or more successfully than we
do. -
page 14

12. The information in this risk factor is too generic to be
informative to an investor.  Please identify the existing products
that your proposed products will compete with.  Also, since you
are
aware of other companies engaged in the development of potentially
competitive products, identify those proposed products and their
manufacturers and indicate, to the extent you are aware, the
development stage of the proposed products.

Product liability lawsuits could divert our resources, result in
substantial liabilities and reduce the commercial potential of our
products. - page 16

13. We note your statement that your insurance may not fully cover
potential liabilities.  Please revise to disclose the limitations
on
your insurance coverage.  Similarly, revise "If we use hazardous
and
biological materials in a way that causes injury or violates
applicable law, we may be liable for damages."

Our rights to develop and commercialize our product candidates are
subject in part to the terms and conditions of licenses or
sublicenses granted to us by other pharmaceutical companies... -
page
18

14. We note that if you fail to meet milestones described in your
licensing agreements with Novartis, your rights to develop and
commercialize iloperidone and VSF-173 may terminate.  Revise to
describe the milestones here and in the description of the
licensing
agreements beginning on page 63.

15. In the next to last sentence of the first paragraph you state
that your rights to develop and commercialize iloperidone may be
impaired if you do not cure breaches by Novartis and Titan of
similar
obligations contained in these sublicense and license agreements.
This suggests that there is an outstanding breach.  If so, please
describe it in reasonable detail along with the steps you have
taken
to cure the breach.  If there is no breach, please revise the
language to eliminate the suggestion that there is one.

A substantial number of shares of our common stock could be sold
into
the public markets shortly after this offering, which could
depress
our stock price. - page 21

16. Please revise to quantify the number of outstanding shares
that
will be eligible to be sold into the public markets.

Existing stockholders significantly influence us and could delay
or
prevent an acquisition by a third party. - page 23

17. Please expand the risk factor to discuss the risk of
management
entrenchment.

Completion of this offering may limit our ability to use our net
operating loss carryforwards. - page 24

18. Please quantify the disclosure in this risk factor.

Use of Proceeds - page 26

19. Please refer to Item 504 of Regulation S-K.  You need to
significantly expand the information included in the second
paragraph
of the discussion to identify the specific research and potential
products that you will use the proceeds for.  Disclose the
specific
amounts that you intend to spend on each of "research," "pre-
clinical
development" and "clinical trials" and how far along the
development
spectrum that you anticipate the proceeds will enable you to go.
Disclose whether material amounts of additional funding will be
necessary to achieve the purposes you have identified.  If so,
disclose the amounts of other funds that will be necessary and the
sources you will obtain them from.

20. You say that the "balance" of the net proceeds will be used
for
general corporate purposes, including working capital and the
acquisition of pharmaceutical products and businesses that are
complementary to your own.  Please be more specific about what
these
purposes are and the amount you will use for each purpose.  We may
have additional comments after reviewing your response.

Capitalization, page 27

21. It appears that your pro forma capitalization table should
include the Series B Preferred Stock issued on December 9, 2005.
Please revise your disclosures or disclose, and explain to us, why
the Series B Preferred Stock issued on December 9, 2005 is
excluded
from the pro forma capitalization table.  Your pro forma column
should give effect to events that have taken place and the pro
forma
as adjusted column should include events that are contingent on
the
offering.

22. Please refer to your tabular disclosures.  It appears that the
solid lines before and after "Accumulated deficit" should be moved
to
the "Total capitalization" line item.  Please revise or advise us.

Dilution, page 28

23. It appears that the pro forma net tangible book value amounts
should include the Series B Preferred Stock issued on December 9,
2005.  Please revise your disclosure or disclose, and explain to
us,
why the Series B Preferred Stock issuance is excluded from the pro
forma amounts.

Management`s discussion and analysis of financial condition and
results of operations

Overview, page 32

24. We note that while you are unable to estimate the specific
timing
and future costs of your clinical development program, your Phase
III
trials for Iloperidone began in November 2005 and you expect them
to
be completed by early 2007. If these trials are successful, you
believe that the related data will support US and European
regulatory
filings. Please disclose the following information for your
research
and development activities related to Iloperidone:

a. The nature, timing and estimated costs of the efforts necessary
to
complete this project;
b. The consequences to operations, financial position and
liquidity
if this project is not completed timely;
c. The period in which material net cash inflows from this project
are expected to commence assuming successful filings with US and
European regulators.

Regarding a., disclose the amount or range of estimated costs and
timing to complete the phase in process and each future phase. To
the
extent that information is not estimable, disclose those facts and
circumstances indicating the uncertainties that preclude you from
making a reasonable estimate.  Please revise your contractual
obligations and commitment disclosures starting on page 44, as
appropriate.

Critical accounting policies

Revenue recognition, page 48

25. We note that you discuss revenue earned under research and
development contracts.  It appears that these types of contracts
are
no longer material since you disclose that Vanda completed its
obligations under these types of consulting agreements during the
year ended December 31, 2004, and no longer seeks such
arrangements.
Please clarify why revenue earned under research and development
contracts is a critical accounting policy to explain this
inconsistency.  If you believe this revenue recognition policy is
critical, it appears that an output-based approach is the
appropriate
model to estimate performance under the contract rather than using
an
input measure, such as cost.  If costs incurred compared to total
estimated costs over the development period approximates the
proportion of the value of the services provided compared to the
total estimated value over the development period, please clarify
your disclosure.  Revise your disclosures in Note 2 to the
consolidated financial statements, as appropriate.

Business - page 51

Potential advantages of iloperidone - page 54

26. In the carryover paragraph at the top of page 55 you reference
"market research we conducted with LEK Consulting."  Rule 436 of
Regulation C indicates that where a report of an expert is
summarized
in the registration statement, the written consent of the expert
summarized in the document shall be filed as an exhibit to the
registration statement.  Please include the written consent of LEK
Consulting in your first amendment to the registration statement.
Also, please provide us with a copy of the document you are
summarizing.

License Agreements - page 63

27. We note that you have not yet filed the license agreements
described under this heading.  Please file them with your first
amendment.  We may have comments regarding the disclosure about
these
agreements once we review them.

28. We note your use of BMS` right to commercialize VEC-162 on its
own if you have not entered into a partnering arrangement after
the
completion of the Phase III program as an example of BMS` rights
with
respect to VEC-162.  All of BMS` material rights and obligations,
as
well as your material rights and obligation, should be described
in
this discussion.  Please revise to describe all rights and
obligations or revise to clarify that this in BMS` only material
right under the agreement.

Patents and proprietary rights; Hatch-Waxman protection - page 69

29. Please explain what a "new chemical entity" patent is and
differentiate it from other patents.

Management - page 72

Executive compensation - page 76

30. Please update this disclosure to include 2005 compensation
information, as well as the 2004 information.

Principal stockholders - page 86

31. Please identify the natural person holding voting and
ownership
control over the shares owned by each non-natural person included
in
the ownership table.

32. Please