Forest Laboratories, Inc.
) reported second quarter fiscal 2014 earnings (excluding the
impact of amortization and other one-time items) of 36 cents per
share, well above the year-ago earnings of 15 cents per share.
Including the impact of amortization, second quarter fiscal 2014
earnings were 26 cents, above the year-ago earnings of 8 cents.
The Zacks Consensus Estimate was 14 cents per share.
Second quarter revenues grew 12.4% to $855.3 million, with net
sales increasing 17.3% to $811.4 million. Total revenues were
well above the Zacks Consensus Estimate of $829 million.
The Quarter in Detail
Second quarter product revenues increased 17.3% to $811.4
million. Performance was primarily driven by new products which
posted sales of $303 million, up 49.9% from the year-ago
Namenda, which is approved for the treatment of moderate and
severe Alzheimer's disease, delivered revenues of $396.3 million,
recording year-over-year growth of 7.8%. Namenda XR, which was
launched in Jun 2013, delivered sales of $11.5 million.
Bystolic, Forest Labs' beta-blocker for the treatment of
hypertension, posted revenues of $130.0 million, up 22.1% 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. A fixed dose combination product would expand
the patient population for Bystolic.
Savella, which is approved for the management of fibromyalgia,
posted revenues of $23.5 million, down 10.4% 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
$14.9 million, slightly above $14.2 million posted in the first
quarter. Teflaro's performance continues to disappoint.
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 $24.5 million (up 25.4% from the year-ago period), Viibryd,
approved for the treatment of major depressive disorder (MDD),
recorded revenues of $47.4 million (up 18.9% 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 $16.7 million (up from $15.9
million in the first quarter), Linzess sales were $34.4 million
(up from $28.8 million in the first quarter).
Contract revenues came in at $36 million, down from $54.3
million in the year-ago period. Benicar co-promotion income grew
15.9% year-over-year to $35 million in second quarter fiscal
Adjusted SG&A expense increased 8.2% to $393.7 million in
the reported quarter. Forest Labs continues to focus on promoting
its new products. Adjusted R&D spend declined 5.7% during the
quarter. Forest Labs expects to spend about $800 million on
R&D this year.
Forest Labs is now guiding towards fiscal 2014 earnings of 95
cents - $1.15 per share. Earlier this year, at the time of
releasing fourth quarter fiscal 2013 results, the company had
guided towards fiscal 2014 earnings of 80 cents - $1.00 per
share. The Zacks Consensus Estimate currently stands at 96 cents
per share, towards the lower end of the new guidance range.
Forest Labs' second quarter fiscal 2014 results reflected the
strong performance of some of its newly launched products as well
as lower R&D spend. With the company raising its guidance and
reporting better-than-expected results, shares were up in
pre-market trading. 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 currently carries a Zacks Rank #3 (Hold). At
present, companies like
) look well-positioned. While Roche is a Zacks Rank #1 (Strong
Buy) stock, Glaxo and Bayer are Zacks Rank #2 (Buy) stocks.
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