Novartis Pharma AG has entered into an agreement for exclusive US and Canadian rights to Fanapt (iloperidone), a new oral medication that is approved by the US Food and Drug Administration (FDA) for the acute treatment of adults with schizophrenia. Novartis plans to launch Fanapt in the US in early 2010.

As part of the agreement with Vanda Pharmaceuticals Inc, Novartis will have exclusive commercialization rights to the oral formulation of this medicine in the US and Canada as well as exclusive rights to develop and commercialize a long-acting injectable (or depot) formulation of this medicine for these markets.

Schizophrenia is a severe psychiatric disorder that is estimated to affect more than 2 million adults in the US and nearly 250,000 Canadians. Fanapt belongs to a class of medication for schizophrenia known as atypical antipsychotics.

"Schizophrenia remains one of the most chronic and debilitating of the major psychiatric illnesses, underscoring the need for new treatment options," said Ludwig Hantson, head of Pharma North America, CEO, Novartis Pharmaceuticals Corporation. "With the launch of Fanapt in early 2010, we will broaden our presence in psychiatry and build on the heritage of Novartis in offering innovative treatments for devastating psychiatric diseases."

Novartis was a pioneer in offering Clozaril (clozapine) as the first atypical antipsychotic medication in the 1970s, which was considered a breakthrough for patients with treatment-resistant schizophrenia. Novartis also offers medications for Alzheimer's disease, attention deficit hyperactivity disorder (ADHD), Parkinson's disease and multiple sclerosis.

Vanda completed phase-III clinical trials in 2006 and gained US regulatory approval for this medicine in May 2009.

Novartis will make an upfront payment to Vanda of USD 200 million for the exclusive rights to commercialize the oral tablet, which is already approved in the US, in the territory of the US and Canada, as well as to develop and commercialize a depot formulation of Fanapt for patients in this territory. Vanda will be eligible for additional payments upon achieving defined development and commercial milestones and will also receive sales royalties. Vanda will retain rights to develop and commercialize Fanapt outside the territory of US and Canada, but Novartis has the option to enter into discussions with Vanda to co-commercialize Fanapt or receive sales royalties outside this territory. The consummation of the transaction is subject to the receipt of customary regulatory approvals, which are expected by the end of 2009.