With the Food and Drug Administration (FDA) approving Vanda Pharmaceuticals' earlier-rejected schizophrenia drug - Fanapt (iloperidone) - a whopping eight-fold increase, a 643 percent jump, in the shares of the Rockville, Maryland-based drugmaker was nothing short of astonishing!

Commenting on the FDA's startling move with regard to the Vanda drug, analyst Natixis Bleichroeder, of Corey Davis, said in a research note: "In one of the most surprising moves we've seen out of the FDA this year, the agency did a complete about face on the drug."

In July last year, the FDA had sent Vanda a "not-approvable" letter for the marketing of the Fanapt drug, manufactured by the Ontario, Canada-based Patheon Inc.

According to Vanda's CEO Mihael Polymeropoulos, the company resubmitted its application last November, and the recent approval was based on further examination of the existing data set.

However, the FDA approval of Fanapt comes with the order that the drug carries a 'boxed warning' about the increased chances of fatality, in case of its off-label use for treating behavioral problems in patients with dementia-related psychosis.

The sudden success of Vanda - along with the last month's similar experience of biotechnology company Dendreon Corp - not only ignites hopes for small drugmakres, but is also indicative of the fact that the investments in small pharmaceutical and biotech companies can be highly rewarding.