April 19 (Reuters) - Hedge fund manager Butler Hall

Capital said on Friday it is urging Vanda Pharmaceuticals ( VNDA )

to form an independent special committee to engage with

Future Pak over its takeover offer and run a full sales process.

On April 17, Vanda rejected a takeover proposal from Future

Pak and adopted a shareholder rights plan to reduce the

likelihood of a hostile takeover.

Vanda had said Future Pak, a privately held contract

manufacturer and packager of pharmaceutical products, had made

an offer of $7.25 to $7.75 per share in cash, which

significantly undervalued the company and was not in the

shareholders' best interest.

Butler Hall, with current ownership of 350,000 outstanding

shares of Vanda, said even though Future Pak's offer

"significantly undervalues" the drugmaker, it does not believe

the board has "earned the right to outrightly reject such an

offer".

"The refusal to engage in a discussion leaves us extremely

concerned that such actions will impair our investment in the

company," said Butler Hall in a letter to the company's board.

Vanda did not immediately respond to a Reuters request for

comment.

Shares of the Washington, D.C.-based drugmaker was up nearly

4% in afternoon trade.