FDA Approved -- Now Will It Sell?

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There is no reason for Clinical Data's (Nasdaq: CLDA  ) investors to be depressed. After the Food and Drug Administration approved Viibryd, its depression drug, on Friday, shares ran up a whopping 67% on Monday and tacked on an additional 5% today.

The increase is certainly deserved. I guessed an approval was more likely than not, but there was still a lot of uncertainty baked into the stock before the FDA's decision.

In fact, there still is.

Even after the run-up, Clinical Data is only a $750 million company. That's a pretty low value given the huge market for depression drugs. Forest Labs' (NYSE: FRX  ) Lexapro sold $587 million in just its most recent quarter. Eli Lilly's (NYSE: LLY  ) Cymbalta rang in at $825 million during the third quarter, although it has the advantage of being also approved for pain indications.

The skepticism that Viibryd can reach those multibillion-dollar levels is completely valid. It'll have to compete with Lexapro and Cymbalta in addition to cheap generic versions of drugs such as Pfizer's (NYSE: PFE  ) Zoloft and Lilly's Prozac. Those are some lofty names to compete against. Labopharm's (Nasdaq: DDSS  ) new antidepressant drug Oleptro managed just $0.8 million in sales in its launch quarter; the fourth quarter results should give a better picture, but that's not exactly bolting out of the gate.

Viibryd hasn't been tested against current offerings, so there's little incentive for doctors to try it on any patients besides those that have failed other treatments. The side effects -- including sexual ones seen in other antidepressants -- seem to be mild, but without Viibryd being compared with other drugs, it's hard to know if they're truly milder than what's already out there.

Clinical Data plans to launch Viibryd in three to four months. That is, if it doesn't find a partner or buyer first. Management said it's been in talks with companies, and it'll consider accepting a buyout offer. But keep in mind that putting a "For Sale" sign on the front lawn doesn't necessarily mean a buyer will appear at the right price. Savient Pharmaceuticals (Nasdaq: SVNT  ) announced its intent to find a buyer, but none appeared.

Clinical Data looks fairly priced to me. Until management can prove that it can grab a solid share of the antidepressant market or find a buyer that thinks it can, I suspect shares will languish at this level.

Interested in keeping track of Clinical Data as it launches Viibryd? Click here to add it to My Watchlist, which will help you keep track of all our Foolish analysis on Clinical Data.

Pfizer is a Motley Fool Inside Value selection. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. The Fool has a disclosure policy.

Read/Post Comments (9) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 25, 2011, at 8:53 PM, rads2005 wrote:

    Your comparisons are terrible. Trazodone has been around for ages. No wonder Oleptro, a repackaged Trazodone, isn't selling well. Physicians aren't stupid.

    you fail to mention that when Savient put itself up for sale, its share price was at $22 and a market cap over 1.6 billion. Right now Savient at 9.9 has the same market cap as CLDA. The drugs for Savient and CLDA are for very different sized markets.

    Sorry, which antidepressants recently when approved were compared directly in clinical trials versus other antidepressants? I suppose that really put a damper on their sales.

    The people right now that talk about the potential limitations of vilazodone currently have are citing extremely superficial arguments. I'm not even in CLDA and I'm calling this article out as poorly argued. Give some more reasonable arguments about the market for vilazodone, the nature of WHY antidepressants continue to sell the way the are, HOW EFFECTIVE SSRIs are, how badly they wane in efficacy over time, the market for depression, the side effects of Cymbalta and others versus vilazodone... etc.

    Address those in an reasoned fashion with reasoned arguments and I'll concede that while we may have a difference in opinion, you have a point. But cite weak arguments like this and I'll continue to verbally spank you.

  • Report this Comment On January 25, 2011, at 8:53 PM, rads2005 wrote:

    and yes, I'm a physician.

  • Report this Comment On January 25, 2011, at 9:48 PM, dpogg wrote:

    What state do you practice in? In MA where I am, insurance companies pretty much tell practitioners what to prescribe. Not sure what the price for this is going to be, but I'm wondering if many docs will reach for it. There are a lot of choices out there. This one seems to have good side effect profile, but it seems to me there are other more powerful options out there. Also, aren't there some triple reuptake inhibitors on the horizon?

  • Report this Comment On January 26, 2011, at 4:01 AM, yearstolearn wrote:

    As the Md stated,Trazodone has been around forever, Cymbalta, many years now and it's efficacy in some patients is waning. I can give first hand knowledge in that on the approved neuropathy front, and in it's antidepressive quality although it is still a wonderful med.Upon discontinuation, Cymbalta has been a quiet struggle for many patients. Not well reported. I can be hell. Cymbalta has also been about on the top of the list in free samples. At some practices there seems to be an endless supply. I'm sure as far as cost there will be programs and incentives. Other preparations have a multitude of side effects, some wane with time, others cannot be tolerated. Viibryd will be welcomed with open arms as long as the P Pad is ready to write for it. Many will pay the co-pay without question for the formulary is yet to be determined with insurance. I see a Home Run in PPS and in a buyout soon. No doubt in my mind. I do not see shares that will languish.Not with Kirks record

  • Report this Comment On January 26, 2011, at 4:28 AM, yearstolearn wrote:

    Also I saw dpogg's post and Mass. is an animal on to itself with mandatory insurance and runaway costs. Many on the depression front from a Patients view ccan't wait for that next drug. Others have been tried and failed and this an oppertunity that CD will jump on. The current PPS is still a deal as I and many others see it, and there was no pullbaack yesterday,+6.36% gain, and how many shorts still remain? The talks are ongoing and a bidding war may ensue or is ongoing.And with other drugs in the pipe of CD, even Forrest Gump would jump on this. Big and medium Pharma has the cash, and see a no-brainer here. ALL dose ranges were approved. Time to sell the Drug to a needy populace, and CD has a "perfect Storm", to sell the company if the price is right. Tremendous value here, and rising. A win win for all. The next PR will, amaze the long and destroy any hope of any significant pullback for those shorts. The Market is huge!!

  • Report this Comment On January 26, 2011, at 10:30 AM, GleemonexV2 wrote:

    ...and where in the discussion was CLDA's second compound in late stage trials, stedivase? This compound, at this point in its trials (Phase 3), looks to be a best in class molecule. While certainly not a market the size of depression, it may very well end up the market leader for its cardiac indication (could be well over $500 million dollars in sales potenital). They have also partnered/optioned other compounds to Novartis and Santen and have a few other tricks up their sleeve (PAH/COPD in or near Phase 2, which they got "stole" from the Predix auction, it appears) and some other preclinical candidates from their Adenosine Therapeutics acquisition.

    I say hit the reset button the article and give them a fair overview.

  • Report this Comment On January 26, 2011, at 11:35 AM, atrac wrote:

    I agree with rads2005 on all the issues stated. I also think there a lot of people in need struggling with depression, that do not want to add the sexual side effect of the existing drugs to their already depressed condition. I believe this is a new untapped market that has not been counted as new users, because at this time they are not being treated.

  • Report this Comment On January 26, 2011, at 11:44 AM, biotech101invest wrote:

    Forest Labs will make an offer within a week or two.

    o Depression Experts

    o Largest drug Lexipro (56% of their TOTAL revenues) goes generic in a matter of months.

    o Lexipro replacement savior late stage depression compound just failed phase 3 pivotal trial Thursday.

    o Scores of experienced depression salesmen will leave if they don't do something soon. There stock will drop to $7-$9 analysts think if they do nothing.

    o Forest has $3 billion in cash. Can have CLDA for $1.2 billion if not other bidders. With BMY, LLY and PFE likely to bid as well - $40 deal likely.

    o Forest HAS to get this deal done. Perfect timing for their sales team to ramp up.

    o Kirk played poker and waited for Forest Ph 3 results - he won. Checkmate. He now has all the leverage.

  • Report this Comment On January 27, 2011, at 1:01 PM, fencejake wrote:

    what share count are you using to calculate market cap that led you to this statement "Clinical Data is only a $750 million company"? it appears you're incorrectly using a 30.0 million count, which erroneously excludes: 1) 6.1 mm of in the money converts, 2) 4.3 mm of in the money warrants, 3) 4.1 mm of in the money options, and 4) 1.0-1.5 mm common stock payable to Merck, according to CLDA’s recent 10Q. The correct share count to use is approximately 45.0 million – and this excludes any additional share issuance associated with an offering.

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