Oct 14 (Reuters) - UK-based Cycle Pharmaceuticals on

Monday reaffirmed its offer to buy Vanda Pharmaceuticals ( VNDA )

in a deal that values the US drugmaker at $488 million,

despite a regulatory setback for its stomach condition drug in

September.

Vanda in June rejected takeover offers from Cycle Pharma and

a revised bid from contract manufacturer Future Pak.

WHY IT'S IMPORTANT

Cycle has proposed to acquire Vanda for $8 per share, an 80%

premium to Vanda's last closing price. The potential offer

follows a 4.5% decline in Vanda's shares after the U.S Food and

Drug Administration declined to approve its drug for a stomach

condition that disrupts digestion.

CONTEXT

Vanda in April adopted a shareholder rights plan, known as a

"poison pill", to reduce the likelihood of a hostile takeover.

Vanda has three approved products, sleep disorder treatment

Hetlioz, Fanapt for bipolar I disorder and Ponvory to treat

multiple sclerosis.

KEY QUOTE

"We stand ready to work immediately with Vanda's board and

management team to reach an agreement that would provide a

compelling premium and certain cash value today for all Vanda

shareholders," Cycle Pharma said in a statement.

Vanda did not immediately respond to a Reuters request for

comment.

MARKET REACTION

Shares of Vanda are up 12.3% at $4.99.