Forest Laboratories, Inc.
) reported fourth quarter fiscal 2014 earnings (excluding the
impact of amortization and other one-time items) of 87 cents per
share, well above the year-ago earnings of 25 cents per share and
the Zacks Consensus Estimate of 44 cents per share. Contribution
from new products, the Aptalis acquisition and the Saphris deal
Fourth quarter revenues grew 34.2% to $1,092.3 million, well
above the Zacks Consensus Estimate of $997 million.
Full year earnings increased to $1.78 per share from 45 cents
in fiscal 2013. The Zacks Consensus Estimate was $1.34 per share.
Revenues increased 17.9% to $3,646.9 million, well above the
Zacks Consensus Estimate of $3,552 million.
The Quarter in Detail
Fourth quarter product revenues increased 33.8% to $1.0
billion. Performance was primarily driven by new products which
posted sales of $431.1 million, up 69.6% from the year-ago
quarter. The Aptalis acquisition as well as the Saphris purchase
Namenda, which is approved for the treatment of moderate and
severe Alzheimer's disease, delivered revenues of $379.2 million,
down13.6% from the year-ago quarter. Namenda XR, which was
launched in Jun 2013, delivered sales of $72.5 million, up from
$37.8 million in the third quarter. Forest Labs is focusing on
switching patients to Namenda XR and will discontinue Namenda IR
from Aug 15.
Meanwhile, Forest Labs is seeking approval for a fixed-dose
combination of Namenda XR and Aricept. The approval of the
fixed-dose combination would allow patients to take just one pill
a day instead of three pills twice daily. The company is working
on getting the combination approved and launched before Namenda
IR goes generic in 2015.
Bystolic, Forest Labs' beta-blocker for the treatment of
hypertension, posted revenues of $142.9 million, up 8.3% from the
year-ago period. Forest Labs is looking to drive Bystolic's
growth by providing additional data on the appropriate use of the
Forest Labs is also working on extending the product's
lifecycle and is seeking FDA approval for a fixed dose
combination of Bystolic and valsartan for hypertension. A fixed
dose combination product would expand the patient population for
Savella, which is approved for the management of fibromyalgia,
posted revenues of $24.6 million, down 6.0% from the year-ago
period. Savella's performance remains lackluster.
Teflaro, launched in Mar 2011 for the treatment of patients
suffering from acute bacterial skin and skin structure infection
and community acquired bacterial pneumonia, posted revenues of
$18.9 million, declining from $22.3 million posted in the third
Two other new products, Daliresp and Viibryd, were launched in
Aug 2011. While Daliresp, approved for the treatment of chronic
obstructive pulmonary disease (COPD), recorded revenues of $29.6
million (up 27.7% from the year-ago period), Viibryd, approved
for the treatment of major depressive disorder (MDD), recorded
revenues of $52.8 million (up 18.4% from the year-ago
Two more products were launched in Dec 2012 - Tudorza (COPD)
and Linzess (treatment of irritable bowel syndrome with
constipation and chronic idiopathic constipation in adults).
While Tudorza delivered sales of $25.3 million (up from $20.4
million in the third quarter), Linzess sales were $60.8 million
(up from $51.0 million in the third quarter).
Fetzima, launched in Dec 2013 for the treatment of adults with
major depressive disorder recorded sales of $3.7 million. Initial
trade stocking was $8.0 million in the third quarter.
Saphris, a twice-daily atypical antipsychotic for the
treatment of adults with schizophrenia or acute bipolar mania,
was commercially re-launched by Forest Labs in Feb 2014. Sales
were $27.9 million.
Products gained through the Feb 2014 Aptalis acquisition
contributed $108.4 million to the top line.
Contract revenues came in at $44.0 million, up from $30.6
million in the year-ago period. Benicar co-promotion income grew
15.9% year-over-year to $28.4 million in fourth quarter fiscal
Adjusted SG&A expense remained flat at $646.7 million in
the reported quarter. Forest Labs continues to focus on promoting
its new products. Adjusted R&D spend declined 32% during the
To Acquire Furiex
Forest Labs, which is set to be acquired by
) in mid-14, continues to focus on strengthening its
gastrointestinal (GI) franchise. The company will be acquiring
Furiex Pharmaceuticals, Inc.
) which has a late-stage GI candidate, eluxadoline, in its
pipeline. This is the second GI-focused deal to be announced by
Forest Labs this year, the other being the Aptalis acquisition.
The Furiex acquisition, which has been approved by Actavis, is
slated to close in the second/third quarter of 2014.
Forest Labs' fourth quarter results were impressive. The
company continues to progress with its pipeline and the Furiex
deal looks good - eluxadoline should be a strong addition to the
company's GI franchise.
Forest Labs is a Zacks Rank #3 (Hold) stock. Some
better-ranked stocks in the health care sector include
), a Zacks Rank #1 (Strong Buy) stock, and Actavis, a Zacks Rank
#2 (Buy) stock.
ACTAVIS PLC (ACT): Free Stock Analysis Report
FOREST LABS A (FRX): Free Stock Analysis
FURIEX PHARMACT (FURX): Free Stock Analysis
SALIX PHARM-LTD (SLXP): Free Stock Analysis
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