1/27/11

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01/27/11

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Clinical Data, Inc. Announces FDA Approval of Viibryd™ (vilazodone HCl) for Major Depressive Disorder

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Drugs

Clinical Data: Bulls and Bears Round Two

1/25/11

NEWTON, Mass. (TheStreet) --Clinical Data (CLDA) scored a big victory with the approval of a new antidepressant, sending the stock price soaring 68% to $25.17 on Monday. Many of the company's shareholders and supporters, however, are looking for an even bigger payday when Clinical Data sells itself to the highest bidder.

Continued

A sale of Clinical Data is seen as an obvious and inevitable next step, many current shareholders believe, because the company's new antidepressant Viibryd is a $2-3 billion-a-year blockbuster that will prove irresistible to any of the large pharmaceutical firms desperate for new growth.

Clinical Data bulls are doubly confident in a sale because they have Randall J. Kirk on their side of the negotiating table. Kirk, Clinical Data's chairman and largest shareholder with a 37% stake, is known as a consummate dealmaker. He became a billionaire after selling New River Pharmaceuticals to Shire (SHPGY) for $2.6 billion in 2007, but previous to that, he had a hand in Johnson & Johnson's (JNJ) $2.3 billion purchase of Scios in 2003.

At Monday's close and using a fully diluted share count, Clinical Data is worth over $1 billion already even with Viibryd still three or four months away from a commercial launch. Yet, bulls like Wedbush Securities analyst Greg Wade believe the company could be bought for upwards of $2 billion, or $40-plus per share. An institutional investor in Clinical Data who asked to remain anonymous believes Clinical Data is worth more, perhaps as much as $60 a share.

Nonsense, say Clinical Data bears, including short sellers who initiated positions Monday on the stock's run-up following Viibryd's approval. To the bear's eye, Viibryd is me-too antidepressant with tolerability issues of its own. Sure, the $12 billion U.S. antidepressant marketing is attractive but cheap generics are grabbing a larger share of the market and insurers will throw reimbursement roadblocks in Viibryd's way. Clinical Data will be lucky to do $300 million in peak Viibryd sales, the bears say.

And while Kirk's money-making M&A track record is undeniable, bears say Shire was an obvious and desperate buyer for New River. With Viibryd, Kirk faces a tougher challenge and no obvious or desperate buyers. This makes Clinical Data look more like Savient Pharmaceuticals (SVNT) or Vanda Pharmaceuticals(VNDA) -- two small drug companies with stocks that spiked on drug approvals only to fall sharply in the following weeks and months. The former couldn't find a buyer and was forced to sell its gout drug solo; the latter found a partner, Novartis, to market its schizophrenia drug but so far, hardly anyone is prescribing it.

A sale of Clinical Data is seen as an obvious and inevitable next step, many current shareholders believe, because the company's new antidepressant Viibryd is a $2-3 billion-a-year blockbuster that will prove irresistible to any of the large pharmaceutical firms desperate for new growth.

Clinical Data bulls are doubly confident in a sale because they have Randall J. Kirk on their side of the negotiating table. Kirk, Clinical Data's chairman and largest shareholder with a 37% stake, is known as a consummate dealmaker. He became a billionaire after selling New River Pharmaceuticals to Shire (SHPGY) for $2.6 billion in 2007, but previous to that, he had a hand in Johnson & Johnson's (JNJ) $2.3 billion purchase of Scios in 2003.

At Monday's close and using a fully diluted share count, Clinical Data is worth over $1 billion already even with Viibryd still three or four months away from a commercial launch. Yet, bulls like Wedbush Securities analyst Greg Wade believe the company could be bought for upwards of $2 billion, or $40-plus per share. An institutional investor in Clinical Data who asked to remain anonymous believes Clinical Data is worth more, perhaps as much as $60 a share.

Nonsense, say Clinical Data bears, including short sellers who initiated positions Monday on the stock's run-up following Viibryd's approval. To the bear's eye, Viibryd is me-too antidepressant with tolerability issues of its own. Sure, the $12 billion U.S. antidepressant marketing is attractive but cheap generics are grabbing a larger share of the market and insurers will throw reimbursement roadblocks in Viibryd's way. Clinical Data will be lucky to do $300 million in peak Viibryd sales, the bears say.

And while Kirk's money-making M&A track record is undeniable, bears say Shire was an obvious and desperate buyer for New River. With Viibryd, Kirk faces a tougher challenge and no obvious or desperate buyers. This makes Clinical Data look more like Savient Pharmaceuticals (SVNT) or Vanda Pharmaceuticals (VNDA) -- two small drug companies with stocks that spiked on drug approvals only to fall sharply in the following weeks and months. The former couldn't find a buyer and was forced to sell its gout drug solo; the latter found a partner, Novartis, to market its schizophrenia drug but so far, hardly anyone is prescribing it.

The Clinical Data bulls won round one against the shorts with Viibryd's approval, but now the fight moves to round two. A closer look at the bull and bear cases for Clinical Data now that Viibryd is approved:


Clinical Data CEO Drew Fromkin isn't guaranteeing a sale of the company but on a Monday conference call and in a subsequent interview, he acknowledged that preliminary discussions with potential buyers and partners have already been held and will continue even as the company moves ahead with the Viibryd launch on its own. The American Psychiatry Association Annual Meeting, May 14-18, could be a key coming-out event for Viibryd.

"I think when you look at the number of new molecular entities, especially in a market of this size being approved is so little, this is a tremendous opportunity for us and a tremendous opportunity for another party," said Fromkin. "And we expect to explore that. But in no way will we waver from our position to be able to launch this product in the next three or four months."

Based on clinical data and comparisons with data generated by older antidepressants, Viibryd's efficacy is on par, perhaps slightly lower, than the many of the other drugs in the antidepressant class. Clinical Data's Fromkin points out that Viibryd's dual mechanism of action means patients may respond differently to Viibryd than they do to other currently marketed antidepressants. Viibryd has not been compared directly against other antidepressants in clinical studies, but Fromkin says Viibryd's label describes a drug that is safe and well tolerated and compares very well to other antidepressants, he adds.

Diarhea, nausea and vomiting were the most commonly reported adverse events in the Viibryd phase III studies but none resulted in more than 1% of patients discontinuing the drug. Overall, only 7% of Viibryd patients discontinued due to an adverse event compared to 3% of placebo patients. Importantly, Viibryd caused no weight gain and minimal sexual side effects. Decreased libido, erectile dysfunction, ejaculation disorder or problems reaching orgasm, were reported by low single-digit percentages of patients on Viibryd.

"By contrast, sexual dysfunction is a major problem with the SSRIs," notes Fromkin, referring to the select serotonin reuptake inhibitor class of antidepressants, which includes Forest Labs'(FRX_) Lexapro.

Viibryd has patent protection in the U.S. through 2019 and possibly as long as 2022.


Wedbush's Wade estimates peak Viibryd sales of more than $2 billion seven years after launch, which represents just 7% to 8% penetration in the overall antidepressant drug market. He thinks a Clinical Data buyout is a real possibility but also believes the company can successfully launch Viibryd on its own and reach break even or a cash-flow positive state within 12 months of a launch.

"I think there's an absence of respect on the Street for what Clinical Data has achieved so far with Viibryd," says Wade.

Potential buyers of Clinical Data include Forest Labs, which just suffered a setback with its own antidepressant in a phase III study, GlaxoSmithKline(GSK_), Pfizer(PFE_), or Eli Lilly(LLY_).

Clinical Data bears downplay Viibryd's "safe and well tolerated" profile, pointing to the 28% rate of diarrhea and 23% rate of nausea observed in the phase III studies as a real tolerability problem for patients. Viibryd's efficacy -- no better or slightly worse than currently marketed antidepressants -- doesn't help either.

One short seller of Clinical Data joked to me that the almost one-third of patients on Viibryd who are suffering from diarrhea are not having sex, which undermines the company's message that Viibryd doesn't impede sexual activity like other antidepressants.

Patients are also required to titrate to a full Viibryd dose over two weeks, which makes taking the drug more of a hassle than other antidepressants that can be taken immediately at full dose.

The biggest impediment to Viibryd's success, bears say, is the competitive antidepressant market itself. While bulls cite $12 billion a year in antidepressant sales, that encompasses broader indications like acute, maintenance and refractory treatment of depression for which Viibryd does not qualify because of a lack of clinical data. In essence, Viibryd, with data from just two, short clinical trials against a placebo, will be considered for a far smaller patient population.

Viibryd has patent protection in the U.S. through 2019 and possibly as long as 2022.


Wedbush's Wade estimates peak Viibryd sales of more than $2 billion seven years after launch, which represents just 7% to 8% penetration in the overall antidepressant drug market. He thinks a Clinical Data buyout is a real possibility but also believes the company can successfully launch Viibryd on its own and reach break even or a cash-flow positive state within 12 months of a launch.

"I think there's an absence of respect on the Street for what Clinical Data has achieved so far with Viibryd," says Wade.

Potential buyers of Clinical Data include Forest Labs, which just suffered a setback with its own antidepressant in a phase III study, GlaxoSmithKline (GSK), Pfizer (PFE), or Eli Lilly (LLY).

Clinical Data bears downplay Viibryd's "safe and well tolerated" profile, pointing to the 28% rate of diarrhea and 23% rate of nausea observed in the phase III studies as a real tolerability problem for patients. Viibryd's efficacy -- no better or slightly worse than currently marketed antidepressants -- doesn't help either.

One short seller of Clinical Data joked to me that the almost one-third of patients on Viibryd who are suffering from diarrhea are not having sex, which undermines the company's message that Viibryd doesn't impede sexual activity like other antidepressants.

Patients are also required to titrate to a full Viibryd dose over two weeks, which makes taking the drug more of a hassle than other antidepressants that can be taken immediately at full dose.

The biggest impediment to Viibryd's success, bears say, is the competitive antidepressant market itself. While bulls cite $12 billion a year in antidepressant sales, that encompasses broader indications like acute, maintenance and refractory treatment of depression for which Viibryd does not qualify because of a lack of clinical data. In essence, Viibryd, with data from just two, short clinical trials against a placebo, will be considered for a far smaller patient population.

And within that smaller patient population of people suffering from depression, many treatment options already exist, including lower-priced generics.

"In the tough reimbursement environment of 2011, Viibryd is the end-of-the-line choice for patients with major depressive disorder," said another Clinical Data short who believes the drug rakes in a fraction of the sales predicted by the bulls.


"Clinical Data has been for sale for months already but has not been able to close a deal because the Big Pharma guys don't have interest in selling another me-too antidepressant," the short seller adds.

Summing up the short thesis: Clinical Data is more than likely to launch Viibryd on its own or under a less-than-ideal marketing partnership agreement this spring. If that happens, bulls will be worried that there is no buyer for the company and the stock will take a big hit.

Selling a new drug in a competitive market is tough for anyone but especially for a smaller company, which puts Clinical Data in the same unenviable position as companies like Allos Therapeutics (ALTH), Somaxon Pharmaceuticals (SOMX), Savient and Acorda Therapeutics (ACOR) which have all suffered stock market falls following drug approvals.

--Written by Adam Feuerstein in Boston.

January 24, 2011

Clinical Data, Inc. Announces FDA Approval of Viibryd™ (vilazodone HCl) for Major Depressive Disorder


Conference Call to Discuss FDA Approval Monday, January 24 at 8:30 am EST

NEWTON, Mass.--(BUSINESS WIRE)-- Clinical Data, Inc. (NASDAQ: CLDA), today announced that the U.S. Food and Drug Administration (FDA) has approved vilazodone HCl tablets, to be marketed under the brand name Viibryd™, for the treatment of adults with major depressive disorder (MDD).1 Viibryd is a new molecular entity and the first and only selective serotonin reuptake inhibitor and 5HT1A receptor partial agonist.1 Clinical Data plans to make Viibryd available in U.S. pharmacies in the second quarter of this year.

U.S. Food and Drug Administration Approves Viibryd(TM) (vilazodone HCl tablets) for Major Depressive Disorder (see accompanying press release for details)(Photo: Business Wire)

"When treating MDD, our goal is to offer treatment options that meet the individual needs of each patient," said Stephen M. Stahl, M.D., Ph.D., Professor of Psychiatry, University of California, San Diego. "Viibryd is an important new treatment option with proven efficacy and a demonstrated safety profile."
The mechanism of the antidepressant effect of Viibryd is not fully understood but is thought to be related to its enhancement of serotonergic activity in the central nervous system (CNS) through selective inhibition of serotonin reuptake. Viibryd is also a partial agonist at serotonergic 5HT1A receptors; however, the net result of this action on serotonergic transmission and its role in Viibryd's antidepressant effect are unknown.1

The efficacy of Viibryd as a treatment for MDD was established in two 8-week, multicenter, randomized, double-blind, placebo-controlled studies in adults who met the criteria for MDD. In these studies, patients were titrated over two weeks to a dose of 40 mg of Viibryd once daily. Viibryd was superior to placebo in the improvement of depressive symptoms as measured by the mean change from baseline to week 8 in the Montgomery-Asberg Depression Rating Scale (MADRS) total score.

Viibryd was demonstrated to be safe in clinical studies. In the placebo-controlled, Phase III studies, the most commonly observed adverse reactions in Viibryd-treated patients were diarrhea, nausea, vomiting and insomnia. No single adverse event led to discontinuation of treatment in greater than 1% of patients. Overall, 7.1% of the patients who received Viibryd discontinued treatment due to an adverse reaction, compared to 3.2% of placebo-treated patients. Viibryd has not been associated with any clinically important changes in laboratory test parameters including liver function tests, ECG including QT interval, or vital signs. In addition, Viibryd had no effect on body weight as measured by mean change from baseline in the 8-week studies. Among the common adverse reactions (≥2%) related to sexual function with Viibryd compared to placebo were decreased libido (4% vs. <1%), abnormal orgasm (3% vs. 0%), delayed ejaculation (2% vs. 0%, males only), and erectile dysfunction (2% vs. 1%, males only).1

"While there are currently available treatments for MDD, no one therapy works for every patient and side effect profiles vary, which may impact both compliance and treatment success," said Carol R. Reed M.D., Executive Vice President and Chief Medical Officer of Clinical Data. "Viibryd will be a new choice for healthcare providers and their patients who are suffering from depression."

"Viibryd is the only antidepressant that is a selective serotonin reuptake inhibitor and 5HT1A receptor partial agonist," said Drew Fromkin, President and CEO of Clinical Data. "It is also the first drug that the Company has developed, and to have received marketing approval from the FDA on its first review is a significant milestone for Clinical Data."

About Depression

Major depressive disorder (MDD), also called major depression, is a mental disorder characterized by an imbalance of chemicals in the brain, also called neurotransmitters, and is one of the most common mental disorders in the U.S. A person diagnosed with MDD exhibits a combination of symptoms that interfere with one's ability to work, sleep, study, eat, and enjoy once—pleasurable activities. Though an episode of depression may occur only once in a person's life, it more commonly recurs throughout a person's lifetime.2

The World Health Organization estimates that MDD affects approximately 18 million people in the U.S.3 More than 212 million prescriptions were written for antidepressants in 2009.4

About Viibryd (vilazodone HCl tablets)

Viibryd was approved for marketing by the FDA on January 21, 2011 for the treatment of MDD in adults. Clinical Data holds exclusive worldwide rights to Viibryd from Merck KGaA, Darmstadt, Germany. The safety of Viibryd was evaluated in 2,177 patients diagnosed with MDD.

Important Information About Viibryd

Indication

VIIBRYD (vilazodone) is indicated for the treatment of major depressive disorder (MDD) in adults.1

Important Safety Information

WARNING: SUICIDALITY AND ANTIDEPRESSANT DRUGS

Antidepressants increased the risk compared to placebo of suicidal thinking and behavior (suicidality) in children, adolescents, and young adults in short-term studies of Major Depressive Disorder (MDD) and other psychiatric disorders. Anyone considering the use of VIIBRYD or any other antidepressant in a child, adolescent, or young adult must balance this risk with the clinical need. Short-term studies did not show an increase in the risk of suicidality with antidepressants compared to placebo in adults beyond age 24; there was a reduction in risk with antidepressants compared to placebo in adults aged 65 and older. Depression and certain other psychiatric disorders are themselves associated with increases in the risk of suicide. Patients of all ages who are started on antidepressant therapy should be monitored appropriately and observed closely for clinical worsening, suicidality, or unusual changes in behavior. Families and caregivers should be advised of the need for close observation and communication with the prescriber. VIIBRYD is not approved for use in pediatric patients.1

Contraindications

VIIBRYD must not be used concomitantly in patients taking MAOIs or in patients who have taken MAOIs within the preceding 14 days due to the risk of serious, sometimes fatal, drug interactions with serotonergic drugs. Allow at least 14 days after stopping VIIBRYD before starting an MAOI.1

Warnings and Precautions

•All patients treated with antidepressants should be monitored appropriately and observed closely for clinical worsening, suicidality, and unusual changes in behavior, especially during the first few months of treatment and when changing the dose. Consider changing the therapeutic regimen, including possibly discontinuing the medication, in patients whose depression is persistently worse or includes symptoms of anxiety, agitation, panic attacks, insomnia, irritability, hostility, aggressiveness, impulsivity, akathisia, hypomania, mania, or suicidality that are severe, abrupt in onset, or were not part of the patient's presenting symptoms.1 Families and caregivers of patients being treated with antidepressants should be alerted about the need to monitor patients.1

•The development of potentially life-threatening serotonin syndrome or Neuroleptic Malignant Syndrome (NMS)-like reactions has been reported with antidepressants alone, but particularly with concomitant use of serotonergic drugs (including triptans) with drugs which impair metabolism of serotonin (including MAOIs), or with antipsychotics or other dopamine antagonists. Symptoms of serotonin syndrome were noted in 0.1% of patients treated with VIIBRYD. Serotonin syndrome symptoms may include mental status changes (e.g., agitation, hallucinations, coma), autonomic instability (e.g., tachycardia, labile blood pressure, hyperthermia), neuromuscular aberrations (e.g., hyperreflexia, incoordination) and/or gastrointestinal symptoms (e.g., nausea, vomiting, diarrhea). Patients should be monitored for the emergence of serotonin syndrome or NMS-like signs and symptoms while treated with VIIBRYD.1

•Symptoms of mania/hypomania were noted in 0.1% of patients treated with VIIBRYD in clinical studies. As with all antidepressants, VIIBRYD should be used cautiously in patients with a history or family history of mania or hypomania.1

•Prior to initiating treatment with an antidepressant, patients with depressive symptoms should be adequately screened to determine if they are at risk for bipolar disorder. VIIBRYD is not approved for use in treating bipolar depression.1

•Discontinuation symptoms have been reported with discontinuation of serotonergic drugs such as VIIBRYD. Gradual dose reduction is recommended, instead of abrupt discontinuation, whenever possible. Monitor patients for these symptoms when discontinuing VIIBRYD. If intolerable symptoms occur following a dose decrease or upon discontinuation of treatment, consider resuming the previously prescribed dose and decreasing the dose at a more gradual rate.1

•Like other antidepressants, VIIBRYD should be prescribed with caution in patients with a seizure disorder.1

•The use of drugs that interfere with serotonin reuptake, including VIIBRYD, may increase the risk of bleeding events. Patients should be cautioned about the risk of bleeding associated with the concomitant use of VIIBRYD and NSAIDs, aspirin, or other drugs that affect coagulation or bleeding.1

•Advise patients that if they are treated with diuretics, or are otherwise volume depleted, or are elderly they may be at greater risk of developing hyponatremia while taking VIIBRYD.1 Although no cases of hyponatremia resulting from VIIBRYD treatment were reported in the clinical studies, hyponatremia has occurred as a result of treatment with SSRIs and SNRIs. Discontinuation of VIIBRYD in patients with symptomatic hyponatremia and appropriate medical intervention should be instituted.1

Adverse Reactions

•The most commonly observed adverse reactions in MDD patients treated with VIIBRYD in placebo-controlled studies (incidence ≥ 5% and at least twice the rate of placebo) were: diarrhea (28% vs. 9%), nausea (23% vs. 5%), insomnia (6% vs. 2%), and vomiting (5% vs. 1%).1

Please see full prescribing information for VIIBRYD at www.viibryd.com. To report suspected adverse reactions, please call Clinical Data, Inc. at 1-877-878-7200 or the FDA at 1-800-FDA-1088 / www.fda.gov/medwatch.

VIIBRYD™ is a trademark of Clinical Data, Inc. and its affiliates.

Conference Call Information

Date: Monday, January 24, 2011

Time: 8:30 a.m. ET

Internet: The live webcast can be accessed at www.clda.com, in the Investor Relations section.
Telephone: Domestic dial (800) 535-7056; International dial (212) 729-5049 (access code: 39633801)

About Clinical Data, Inc.

Clinical Data's mission is to develop first-in-class and best-in-category therapeutics. The Company's lead product, Viibryd, was approved for marketing by the FDA for the treatment of major depressive disorder in adults. The Company is also advancing its late-stage drug candidate, Stedivaze, a pharmacologic stress agent in Phase III development for use during myocardial perfusion imaging. Clinical Data has promising drug candidates entering the clinic in major therapeutic areas including asthma, ophthalmology and diabetes. To learn more, please visit the Company's website at www.clda.com.

1 Viibryd Label.

2 http://www.nimh.nih.gov/health/publications/depression/what-are-the-different-forms-of-depression.shtml

3 Greden, John F. The Burden of Recurrent Depression: Causes, Consequences, and Future Prospects, Journal of Clinical Psychiatry, 2001.

4 IMS Health's National Prescription Audit, 2009.

Clinical Data, Inc.

Vice President

Corporate Communications

Theresa McNeely, 617-467-6673

or

Media inquiries:

Ruder Finn Public Relations

Trina Chiara, 860 673-4017

Source: Clinical Data, Inc.

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