Vanda shares swoon after FDA rejects therapy

Shares of Vanda Pharmaceuticals plunged after the FDA issued a non-approvable letter for its lead therapy, the schizophrenia drug iloperidone. Vanda now faces a big hurdle in the form of a new clinical trial to produce the data the agency is requiring for approval.

Regulators are asking for a trial that compares its therapy against placebo and an "active comparator" like Risperdal or Zyprexa. And they want more safety data as well. That's not what investors wanted to hear. They bailed out of the stock, sending it down 62 percent in early trading. Vanda had $65.6 million in cash on hand at the end of June.

- here's Vanda's release
- read the report from TheStreet