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Biotech Stock Mailbag: Clinical Data, Mannkind and Thanks!

This investor accuses me of purposefully withholding information about Kirk and his involvement with Clinical Data because of a personal grudge and/or past articles I wrote about New River. He points to this 2007 article about New River's attention deficit disorder drug Vyvanse, specifically.

"You didn't tell the reader you had done this before with a Kirk company with very bad results for you, or even that Kirk had a very successful history developing drugs. You talk about Clinical Data in a vacuum. Honestly, this seems like anything but full disclosure to the reader…"

Kirk's deal to sell New River to Shire was genius, although Vyvanse, under Shire's control, did not meet initial sales expectations, so call me right on the drug, wrong on the stock. Kirk's business resume, however, wasn't relevant to the story I was telling in my column -- the bear thesis on vilazodone as explained by someone with a short position in Clinical Data.

The vilazodone column doesn't ignore the positives, as this long investor contends. In fact, the column states very clearly the "positive" clinical data from the drug's two phase III studies. What's sorely lacking most places these days, and which my column accomplishes, is present an alternative interpretation of the vilazodone data in the public domain that happens to be more skeptical.

Investors have no problem finding the bull story on stocks and Clinical Data is no exception, judging by the recent onslaught of Seeking Alpha articles and blog posts all extolling the vilazodone's virtues. But why wouldn't a fully informed investor also want to know about the downside, the risks, the potential negatives? Due diligence isn't diligent without understanding a stock's bull and bear thesis.

The FDA is expected to announce an approval decision for vilazodone on Jan. 22, 2011.

Via Twitter, @Superduty03 asks, "Are you ever an optimist?"

The simple answer is "not very often."

You need to understand that I'm a journalist, which means skepticism, even cynicism, is an integral part of my DNA. I see the glass half empty. I question everything and everyone, especially biotech executives. My motto: Mistrust AND Verify. Biotech investors are generally well served by skepticism. We all know the high failure rate in the sector and the hyperbole tossed around about LIFE-SAVING MEDICAL ADVANCES that usually accompanies even the most mundane announcements.

Ask anyone who knows me personally and they'll tell you that I'm a cheerful, happy and outgoing guy. When it comes to my professional life writing about biotech stocks, however, I set a very high bar for optimism and cheerfulness. In biotech investing, optimism is usually a good way to lose money.
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