May 24 (Reuters) - Vanda Pharmaceuticals ( VNDA ) said

on Friday its board of directors has rejected Future Pak's

unsolicited takeover proposal.

Vanda said privately held contract manufacturer Future Pak's

revised offer of $7.25 to $7.75 per share substantially

undervalued the company, created significant risk and "is not in

the best interests of the company and its shareholders".

Future Pak in May sweetened its buyout offer for Vanda to

include contingent value rights, in addition to the proposed

offer price.