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TAKEOVER ALERT: A TAKEOVER BID FOR CLINICAL DATA (CLDA)? (12-8-2010)

By Gene Marcial.

A lot of takeover chatter is swirling around Clinical Data (CLDA), which has developed a potential blockbuster antidepressant called Vilazodone, which some pros predict will be approved by the Federal Drug & Administration by early next year. But the latest scuttlebutt is that a FDA decision may come sooner..

The betting is that the FDA could deliver its imprimatur on the new antidepressant sometime in late December. That has prompted some close Clinical Data watchers to conclude that whoever is aiming to make a takeover bid for the company will come out with a bid sometime this month.

Of course, there is no guarantee that the drug would be approved. In many cases, the FDA asks for more data or studies to gain more convinced that the product is A-Okay. Usually, a move like that results in striking down the company’s stock. But then again, in some instances the same stock recovers as the FDA subsequently moves to approve the product, delayed as it might be.

Some analysts say Vilazodone has made Clinical Data an attractive takeover target for any of the major players in the field, including Pfizer, (PFE), Eli Lilly (LLY), Forest Labs (FRX), GlaxoSmithKline (GSK), and Merck (MRK). Some investors are betting that Vilazodone will receive the FDA’s blessing, and if it does, it will be the first new entry into the antidepressant market in more than 15 years.

What’s unusual about Vilazodone is that unlike its rivals, the product doesn’t suppress or affect a patient’s sexual function. Patients suffering from depression usually experience difficulties with sexual functioning, which tends to be worsened by antidepressant treatments, says Chrystyna Bedrij, biotech analyst at Griffin Securities, who rates the stock a buy. Vilazodone is “neutral” on the issue of sexual function, she says, as it doesn’t harm a patient’s sexual ability.

Bedrij puts the intrinsic worth of Clinical Data, currently trading at $17 a share, at $33, Optimism about the fate of Vilazodone is mainly based on the fact that the antidepressant already has completed all the required clinical trials with significantly positive results on efficiency and safety. Clinical Data’s application for Vilazodone as new drug is supported by data from nearly 3,000 patients who have taken the drug safely with a low occurrence of negative side effects, according to the analyst.

The major players in anti-depressants so far aren’t yet showing their cards as they are waiting for more evidence that the FDA will, indeed, give the new drug the green light. It’s a risky game for them because once the word gets out that the FDA has okayed the product, Clinical Data’s stock will quickly soar and make it more expensive to chase the stock. It is very possible that a suitor will come out sometime soon with a solid offer to buy the company – even before the FDA makes its decision, say some investors.

Indeed, the early bird usually catches the worm. The betting is that one of the big players may place a bet on Vilazodone and opt to make an offer to buy Clinical Data. That would be a gutsy move, but it could also prove profitable – should the FDA anoint Vilazodone as the new player on the block.

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