Oct 14 (Reuters) - UK-based Cycle Pharmaceuticals on Monday reaffirmed its offer to buy Vanda Pharmaceuticals

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.

(Reporting by Sneha S K in Bengaluru; Editing by Vijay Kishore)

((Sneha.SK@thomsonreuters.com;))