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Vanda Pharmaceuticals

(VNDA) - Get Vanda Pharmaceuticals Inc. Report

entered into an exclusive license agreement with Swiss drugmaker

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(NVS) - Get Novartis AG Report

to commercialize and develop schizophrenia drug Fanapt in the U.S. and Canada.

Under the agreement, which amended a prior deal between the two companies, Novartis will have exclusive rights to commercialize Fanapt for the U.S. and Canada. Novartis also will develop and commercialize a long-acting injectable formulation of the drug.

Vanda will receive an upfront payment of $200 million and will be eligible for additional payments totaling up to $265 million for certain milestones. Vanda also will receive royalties from the U.S and Canadian sales of Fanapt.

Vanda, meanwhile, will retain rights to commercialize Fanapt oral and depot formulations outside the U.S and Canada. At the option of Novartis, the companies will enter into talks for a co-commercialization agreement outside the U.S and Canada.

The deal is subject to customary regulatory approvals, which are expected by the end of 2009.