Forest Laboratories, Inc.
) reported first quarter fiscal 2014 earnings (excluding the
impact of amortization and other one-time items) of 28 cents per
share, flat from the year-ago period. Including the impact of
amortization, first quarter fiscal 2014 earnings were 19 cents, a
couple of cents below the year-ago earnings of 21 cents. The
Zacks Consensus Estimate was 7 cents per share.
Including one-time items, first quarter fiscal 2014 earnings
were 9 cents, well below the year-ago earnings of 21 cents.
First quarter revenues grew 1.4% to $832.9 million, with net
sales increasing 6% to $796.9 million. Total revenues were well
above the Zacks Consensus Estimate of $799 million.
The Quarter in Detail
First quarter product revenues increased 6% to $796.9 million.
Performance was primarily driven by new products which posted
sales of $294.1 million, up 47.8% from the year-ago quarter.
Namenda, which is approved for the treatment of moderate and
severe Alzheimer's disease, delivered revenues of $397.5 million,
recording year-over-year growth of 7.9%. Namenda XR, which was
launched in Jun 2013, delivered sales (initial trade stocking) of
Namenda sales, which had improved in the fourth quarter of
fiscal 2013, declined 9.4% on a sequential basis.
Lexapro sales continued to be negatively impacted by the entry
of additional generics in the market following the expiry of the
Hatch-Waxman six-month exclusivity period on Sep 13. Sales
declined to $28.2 million from $110 million in the year-ago
Bystolic, Forest Labs' beta-blocker for the treatment of
hypertension, posted revenues of $126.0 million, up 16.8% 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 reported positive data from a phase III study on a
fixed dose combination of Bystolic and valsartan for
hypertension. The company intends to file for FDA approval of
this combination in early calendar 2014. A fixed dose combination
product would expand the patient population for Bystolic.
Savella, which is approved for the management of fibromyalgia,
posted revenues of $25 million, down 6% 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
$14.2 million, slightly above $13.1 million posted in the fourth
quarter of fiscal 2013. Teflaro's performance continues to
Two other new products, Daliresp and Viibryd, were launched in
Aug 2011. While Daliresp, which is approved for the treatment of
chronic obstructive pulmonary disease (COPD), recorded revenues
of $24 million (up from $23.2 million in the fourth quarter of
fiscal 2013), Viibryd, approved for the treatment of major
depressive disorder (MDD), recorded revenues of $46.1 million (up
from $44.6 million in the fourth quarter of fiscal 2013).
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 $15.9 million (up from $10.8
million in the fourth quarter of fiscal 2013), Linzess sales were
$28.8 million (up from $4.5 million in the fourth quarter of
Forest Labs is looking to seek FDA approval for a fixed dose
combination of Tudorza and formoterol for the treatment of
patients with moderate to severe COPD by the end of calendar
Contract revenues came in at $31.9 million, down from $65.8
million in the year-ago period. Benicar co-promotion income
declined 20.6% year-over-year to $28.1 million in first quarter
Adjusted SG&A expense increased 9.3% to $417.7 million in
the reported quarter. Forest Labs continues to focus on promoting
its new products. Adjusted R&D spend declined 14.2% during
Forest Labs' first quarter fiscal 2014 results reflected the
strong performance of some of its newly launched products
especially Linzess as well as lower R&D spend. However, we
were disappointed to see a sequential decline in Namenda
Meanwhile, we remain encouraged by Forest Labs' progress with
its pipeline candidates. The company has launched several new
products over the past couple of years and is looking to launch
additional products going forward.
Forest Labs has two important regulatory events coming up -
levomilnacipran (treatment of major depressive disorder) in the
coming days and cariprazine (treatment of schizophrenia and acute
mania associated with bipolar 1 disorder) later this year.
Forest Labs currently carries a Zacks Rank #3 (Hold). Currently,
Cadence Pharmaceuticals Inc.
) look well-positioned. While Cadence and Jazz are Zacks Rank #1
(Strong Buy), Auxilium is a Zacks Rank #2 (Buy) stock.
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