Forest Laboratories is preparing to splash out $1.2 billion to acquire Clinical Data, getting access to the latter's recently-approved antidepressant Viibryd.
Forest will pay $30 per share in cash, which actually is down 12% on CD's closing price on Friday, and an additional $6 a share based on the success of Viibryd (vilazodone). The selective serotonin reuptake inhibitor and a 5-HT1A receptor partial agonist was approved by the US Food and Drug Administration a month ago for the treatment of adults with major depressive disorder.
With Celexa (citalopram) and Lexapro (escitalopram), Forest notes that it has a "proven track record of successfully commercialising novel anti-depressants" and it plans to launch Viibryd in the USA during the second half of 2011. Importantly, it is expected to retain market exclusivity until March 2020 "including full patent term extension of its composition of matter...and anticipated paediatric exclusivity".
Forest is gambling that Viibryd will help offset the loss of earnings it will suffer when Lexapro goes off-patent in 2012. Chief executive Howard Solomon said that "this transaction is consistent with our strategy to acquire new products that will help offset the loss of revenues due to patent expiries".
He added that Viibryd will be the second new product Forest launches this year in addition to Teflaro (ceftaroline) for the treatment of community-acquired bacterial pneumonia and acute bacterial skin and skin structure infections. In addition, Mr Solomon hopes the firm will obtain FDA approval later this quarter for Daxas (roflumilast), for the treatment of chronic obstructive pulmonary disease which is licensed from Nycomed.
The transaction is expected to be dilutive, net of synergies, to Forest's earnings per share for the next three years, and in the range of $0.55-$0.65 in fiscal 2012. The purchase may become accretive during fiscal 2014 but Forest noted that the launch of Viibryd "will require significant incremental marketing and sales investment, including a planned sales force expansion".
Some analysts are not convinced that this is a great deal. David Amsellem at Piper Jaffray believes the likelihood of Viibryd becoming a $1 billion drug is small, noting that "the days of the blockbuster antidepressant are largely behind us". He expects peak annual sales of $500-$700 million.
At Datamonitor, Daniel Chancellor was a bit more positive. He said that since gaining FDA approval for Viibryd, CD "has become a prime acquisition target" and “Forest fits the bill perfectly". The deal also "refreshes a pipeline that suffered a recent setback with negative Phase III data for levomilnacipran,” an MDD drug being developed with Pierre Fabre.