Why Shares of Vanda Pharmaceuticals Are Dropping on Tuesday

What happened

Shares of Vanda Pharmaceuticals (NASDAQ: VNDA) were down more than 16% as of 2:15 p.m. on Tuesday. The pharmaceutical stock has been in decline for several months, and in May, it announced it was suing the federal government, saying the Food and Drug Administration (FDA) passed trade secrets about sleep-disorder drug Hetlioz and schizophrenia therapy Fanapt, Vanda's only marketed therapies, to generic drug competitors.

So what

The long slide was given an additional push over the weekend when the S&P 600 SmallCap Index announced late Friday that Vanda would be dropped from the index. Various exchange-traded funds (ETFs) use the index as a basis for choosing stocks to invest in, so that means likely lower trading for Vanda.