Clinical Data’s stock price has been mounting this morning as news spreads that the Newton, MA-based drug developer’s treatment for depression has gained FDA approval.
The company’s (NASDAQ:CLDA) shares were trading at $24.05 as of 9:42 am Eastern time today, a 60-percent jump from its closing price on Friday. This is a huge win for the firm, which has no other approved drugs under its belt. It now plans to bring the drug, vilazodone, to the U.S. market in the second quarter under the brand name “Viibryd.”
Clinical Data, which owns worldwide rights to vilazodone from Germany’s Merck KGaA, will offer the drug as a new option for treating patients with major depressive disorder. While the market is already teaming with antidepressants, there’s a notoriously high failure rate among exiting drugs in treating patients.
The company confirmed the safety and effectiveness of vilazodone in two eight-week clinical trials. The drug not only acts as a selective serotonin reuptake inhibitor, not unlike the antidepressant paroxetine (Paxil), but it also is supposed to impact the so-called 5HT1A receptor, a target for the anti-anxiety pill buspirone. Though the combination makes the drug unique, the company says the mechanism of the drug isn’t fully understood.
The FDA’s approval of the drug rewards Clinical Data for acquiring it in 2005 in a buyout of New Haven, CT-based Genaissance Pharmaceuticals. Clinical Data also altered the dose of the drug to optimize its effectiveness in clinical trials. German Merck had previously quit on the drug after it failed to perform better than a placebo in clinical trials, Clinical Data CEO Drew Fromkin told me in an interview last year.
“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,” Fromkin said in today’s press release.
Clinical Data has staked millions on the success of vilazodone and has sold off other business units to raise cash for its development. And the company had an accumulated deficit of $370.3 million as of the quarter ending September 30, 2010. Pretty soon the company will be in a position to start chipping away at that deficit with revenue from vilazodone sales.
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