Forest Laboratories, Inc.
) reported fourth quarter fiscal 2013 earnings of 25 cents per
share, down from the year-ago earnings of 77 cents per share but
above the Zacks Consensus Estimate of 19 cents per share. The
year-over-year decline reflected the impact of the genericization
Fourth quarter revenues declined 22.2% to $821.7 million, with
net sales falling 21.4% to $783.2 million. Total revenues were
above the Zacks Consensus Estimate of $812 million.
Full year earnings came in at 45 cents per share, down from
the year-ago earnings of $3.88 per share but above the Zacks
Consensus Estimate of 41 cents per share.
Fiscal 2013 revenues declined 31.8% to $3.1 billion, with net
sales falling 33.9% to $2.9 billion. Total revenues were in line
with the Zacks Consensus Estimate.
The Quarter in Detail
Fourth quarter product revenues declined 21.4% to $783.2
million. Namenda, which is approved for the treatment of moderate
and severe Alzheimer's disease, delivered revenues of $438.8
million, recording year-over-year growth of 11.6%.
Namenda, which had been performing below expectations over the
past few quarters, improved on a sequential basis as well. Forest
Labs intends to launch Namenda XR this year and expects fiscal
2014 Namenda sales, including Namenda XR, of about $1.625
billion, up from $1.5 billion in fiscal 2013.
Lexapro sales were 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.
Bystolic, Forest Labs' beta-blocker for the treatment of
hypertension, posted revenues of $132.0 million, up 36.2% from
the year-ago period. Bystolic's current run-rate indicates annual
sales of more than $500 million in fiscal 2014. Forest Labs
expects sales of about $535 million in fiscal 2014 (up from $455
million in fiscal 2013). Forest Labs is looking to drive
Bystolic's growth by providing additional data on the appropriate
use of the product.
Forest Labs is also working on extending the product's
lifecycle and is conducting a phase III study with a fixed dose
combination of Bystolic and valsartan (the market leader) for
hypertension. A fixed dose combination product would expand the
patient population for Bystolic. Top-line data should be out in
the June quarter.
Positive results would allow Forest Labs to move ahead with
its plans of filing for US approval in early calendar 2014.
Approval as a first-line treatment would boost sales
Savella, which is approved for the management of fibromyalgia,
posted revenues of $26.1 million, up 3.2% from the year-ago
period. Savella's performance remains lackluster. Forest Labs
expects fiscal 2014 Savella sales of $106 million, barely above
fiscal 2013 sales of $105 million.
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
$13.1 million, slightly above $11.5 million posted in the third
quarter of fiscal 2013. Teflaro's performance continues to
disappoint. Fiscal 2014 sales are expected to increase 36.4% 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 $23.2 million (up from $17.5 million in the third quarter of
fiscal 2013), Viibryd, approved for the treatment of major
depressive disorder (MDD), recorded revenues of $44.6 million (up
from $40.6 million in the third quarter of fiscal 2013).
The improvement in Daliresp sales was due to the severe flu
season. While fiscal 2014 Viibryd sales are expected to increase
35% to $220 million, Daliresp sales are expected to increase
about 41% to $110 million.
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 $10.8 million, Linzess sales
were $4.5 million.
Forest Labs expects Tudorza sales to increase to about $90
million in fiscal 2014 (up from $23 million in fiscal 2013).
Meanwhile, Linzess sales are expected to be about $170 million in
fiscal 2014 (up from $24 million in fiscal 2013).
Contract revenues came in at $30.6 million, down from $46.8
million in the year-ago period. Benicar co-promotion income
declined 17.2% year-over-year to $24.5 million in fourth quarter
fiscal 2013 and is expected to decline 32% in fiscal 2014.
SG&A expense decreased 9.2% to $372.7 million in the
reported quarter. Forest Labs continues to focus on promoting its
new products. Adjusted R&D spend increased 6.9% during the
quarter. While Forest Labs expects to spend $1.75 billion on
SG&A in fiscal 2014, R&D spend is expected to be about
Fiscal 2014 Guidance
Forest Labs provided its outlook for fiscal 2014. The company
expects earnings of $0.80 - $1.00 per share (excluding
acquisition-related amortization) on total net revenues of about
$3.5 billion. The Zacks Consensus Estimate for earnings currently
stands above the guidance range at $1.04 per share. The revenue
guidance is in-line with the Zacks Consensus Estimate.
Forest Labs expects total product sales of $3.3 billion, up
from $2.9 billion in fiscal 2013. Guidance includes the impact of
the launch of Namenda XR as well as levomilnacipran, which is
currently under FDA review. Forest Labs is currently guiding
towards levomilnacipran sales of about $13 million.
The company expects its next generation products (Bystolic,
Savella, Teflaro, Daliresp, Viibryd, Tudorza and Linzess) to
deliver sales of $1.32 billion in fiscal 2014.
Forest Labs' fourth quarter fiscal 2013 results were
better-than-expected. Importantly, Namenda, which had been
performing below expectations, improved on a sequential basis.
However, the company's earnings guidance for fiscal 2014 was
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 in
the second half of calendar 2013 - levomilnacipran (treatment of
major depressive disorder) and cariprazine (treatment of
schizophrenia and acute mania associated with bipolar 1
Forest Labs currently carries a Zacks Rank #3 (Hold).
Companies that currently look better-positioned include
Catalyst Pharmaceutical Partners Inc.
). All three are Zacks Rank #1 (Strong Buy) stocks.
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