Vanda Pharmaceuticals Inc. has reached a settlement agreement with Novartis AG (Novartis) related to the ongoing Fanapt license arbitration proceedings.  The parties have agreed to dismiss the ongoing Fanapt arbitration and to release each other from any related claims.

As a part of the settlement agreement, Novartis will transfer all US and Canadian rights in the Fanapt franchise to Vanda, make a $25 million equity investment in Vanda at a price per share equal to $13.82 and grant to Vanda an exclusive worldwide licence to AQW051, a phase II alpha-7 nicotinic acetylcholine receptor partial agonist.

"We are happy to have reached agreement with Novartis to settle our dispute, allowing us to focus on developing therapeutic solutions for our patients.  The addition of the US and Canadian rights for Fanapt to our commercial portfolio, which includes Hetlioz for the treatment of Non24, has the potential to be transformational for our company," said Mihael H. Polymeropoulos MD, president and chief executive offficer of Vanda.

Fanapt is currently approved in the US for the treatment of schizophrenia in adults and has patent coverage through two key patents, a new chemical entity (NCE) patent set to expire in November of 2016 and a method of treatment patent set to expire in 2027.  Fanapt is also approved and marketed in Israel and Mexico.