Sometimes when trees grow too fast without proper root structure, they end up toppling over.
Take drug-development sapling Clinical Data
One came, but it wasn't exactly at the price the bulls were hoping for. Clinical Data announced today that it agreed to be purchased by Forest Labs
- $1.00 if sales reach or exceed $800 million within the first five years
- $2.00 if they hit $1.1 billion within the first six years
- $3.00 if they hit $1.5 billion within the first seven years
Technically the total payout could be higher than Friday's close of $33.90, but investors don't see that happening; the extra payment is being valued around $1.00.
The problem is Viibryd has to compete with a ton of other antidepressants on the market. There's Forest's Lexapro and Eli Lilly's
While Forest Labs' purchase is an endorsement of Viibryd's potential, the structure of the deal is clearly an indication that Forest realizes it has an uphill battle to gain traction in the crowded market. In fact, the company said the deal won't be accretive for at least three years.
Viibryd may turn into a blockbuster tree for Forest, but it's going to take a lot of nurturing to get it to grow up strong.
Alex Pape says this spring will be full of special situations to potentially profit from.
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