Less than two months after starting a pivotal trial with its lead drug candidate in schizophrenia, Vanda Pharmaceuticals Inc. filed for an initial public offering with hopes to raise $75 million.

The Rockville, Md.-based company's prospectus did not disclose the number of shares or the share price, but said proceeds would be used to fund research and development, clinical trials, potential product acquisitions and general corporate purposes. Upon completing the IPO, Vanda's shares would be listed on Nasdaq under the symbol "VNDA."

The company, which develops small-molecule drugs for treating central nervous system disorders, has three products in clinical development, starting with its lead product, iloperidone, which began a 600-patient Phase III trial in November.

Described as an atypical antipsychotic, iloperidone has been tested in more than 2,000 patients, demonstrating reduced side effects compared to standard antipsychotic therapies that can cause weight gain, induction of diabetes and involuntary body movements, as well as hyperprolactinemia, which can lead to sexual dysfunction, breast development and milk secretion in both men and women.

Iloperidone also has shown a lower incidence of sleepiness and low negative effects on cognition compared to placebo.

The Phase III study will test an oral formulation of iloperidone at twice-daily doses of 12 mg for four weeks to demonstrate statistically significant efficacy over placebo.

Vanda expects the trial to conclude during the first half of 2007, and assuming positive results, the company will file a new drug application later that year.

Worldwide rights to iloperidone were acquired through a sublicense agreement with Basel, Switzerland-based Novartis AG, which gained rights to the compound from Titan Pharmaceuticals Inc., of South San Francisco.

In addition to the oral formulation, Vanda is developing a four-week injectable depot version of iloperidone, aimed at addressing the common problems of patient compliance and discontinuation. That product recently completed a Phase I/IIa trial.

Vanda also is testing iloperidone as a potential treatment for bipolar disorder, and the drug is set to begin a Phase II trial in that indication.

Though the company anticipates finding a commercial partner for the drug outside the U.S., it plans to build a sales force and handle all U.S. marketing on its own.

Its second product, however, would target much larger markets, and for that, Vanda expects to seek a global partner for development and commercialization.

That product, VEC-162, is an oral small-molecule melatonin agonist that is entering a Phase III trial for insomnia and is ready to begin Phase II studies in depression.

VEC-162, licensed from New York-based Bristol-Myers Squibb Co. in 2004, is designed to have several benefits over approved insomnia therapies by benefiting both sleep onset and sleep maintenance, and Vanda believes the drug's mechanism of action carries no potential for abuse.

The company's third product, VSF-173, is expected to start a Phase II study during the second half of this year for excessive daytime sleepiness, a condition treated primarily by stimulants. In preclinical studies, VSF-173, an oral, small molecule, has demonstrated effects on animal sleep/wake patterns and gene expression suggestive of a stimulant.

VSF-173 also was licensed from Novartis, and the Swiss company retains an option to commercialize the product on its own after Phase II and Phase III, in exchange for certain milestones and royalty payments.

Since beginning operations in March 2003, Vanda incurred total operating expenses of $29.9 million through Sept. 30, 2005. For the first nine months of 2005, the company reported research and development costs of $11.6 million and a net loss of $17 million.

At the end of September, Vanda had cash and cash equivalents totaling $22.3 million, though the company closed an additional $15 million private placement in December. To date, it has brought in about $60 million.

Prior to the offering, 23 percent of the company was owned by Care Capital Investments II LP, of Princeton, N.J., with 9.2 million shares. Other owners include: Domain Partners VI LP, also of Princeton (20 percent, 8.1 million shares); Biomedical Sciences Investment Fund Pte. Ltd., of Centros, Singapore (16 percent, 6.5 million shares); Prospect Ventures II LP, of Palo Alto, Calif. (15 percent, 6.1 million shares); Rho Ventures IV LP, of New York (15 percent, 6.1 million shares); and MedImmune Ventures Inc., of Gaithersburg, Md. (10 percent, 4.1 million shares).

Vanda, which also has a facility in Singapore, has about 30 full-time employees.