April 19 (Reuters) - Hedge fund manager Butler Hall Capital said on Friday it is urging Vanda Pharmaceuticals to form an independent special committee to engage with Future Pak over its takeover offer and run a full sales process.

On April 17, Vanda rejected a takeover proposal from Future Pak and adopted a shareholder rights plan to reduce the likelihood of a hostile takeover.

Vanda had said Future Pak, a privately held contract manufacturer and packager of pharmaceutical products, had made an offer of $7.25 to $7.75 per share in cash, which significantly undervalued the company and was not in the shareholders' best interest.

Butler Hall, with current ownership of 350,000 outstanding shares of Vanda, said even though Future Pak's offer "significantly undervalues" the drugmaker, it does not believe the board has "earned the right to outrightly reject such an offer".

"The refusal to engage in a discussion leaves us extremely concerned that such actions will impair our investment in the company," said Butler Hall in a letter to the company's board.

Vanda did not immediately respond to a Reuters request for comment.

Shares of the Washington, D.C.-based drugmaker was up nearly 4% in afternoon trade.

(Reporting by Christy Santhosh in Bengaluru; Editing by Krishna Chandra Eluri)