Forest Settles with Glenmark - Analyst Blog

Forest Laboratories, Inc. ( FRX ) recently entered into a settlement agreement with Glenmark Pharmaceuticals Ltd., relating to its patent infringement litigation for Bystolic (nebivolol).

Glenmark was looking to launch its generic version of Bystolic. Under the terms of the settlement agreement, Forest Labs will provide a license to Glenmark allowing the latter to launch its generic versions of Bystolic subject to certain conditions.

Glenmark will be allowed to launch its generic version three months ahead of the expiration of US Patent No. 6,545,040 (including any extensions and/or pediatric exclusivities) or on gaining final FDA approval of its abbreviated new drug application (ANDA), whichever occurs later. However, Glenmark could launch its generic version earlier in certain circumstances.

We note that Forest Labs has already settled litigation with companies like Hetero Labs Ltd., Alkem Laboratories, Ltd., Indchemie Health Specialties Pvt. Ltd. and Torrent Pharmaceuticals Ltd. All these companies were looking to launch their generic versions of Bystolic.

However, Forest Labs still has patent infringement litigation against Amerigen Pharmaceuticals Ltd. and Watson Pharmaceuticals Inc. ( WPI ), and related companies pending in the court.

Forest Labs has a strong presence in the cardiovascular disease market. Forest Labs' cardiovascular products include hypertension drug Benicar/HCT and Bystolic, a long-acting, cardio-selective beta-blocker. We believe that Bystolic's unique characteristics such as its low side-effect profile could make it a multi-million dollar revenue generator.

We continue to be encouraged by positive efficacy and tolerability data which we believe will help differentiate the drug from generic beta blockers in the market. Bystolic turned in sales of $347.8 million in fiscal 2012, up 31.6%. Bystolic has $500 million potential in its current indication.

Forest Labs is looking to drive Bystolic's growth by providing additional data on the appropriate use of the product. The company is also working on extending the product's lifecycle by 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.

We currently have a Neutral recommendation on Forest Labs which carries a Zacks Rank #3 (Hold). Forest is facing tough times with Lexapro losing patent protection.

Moreover, the company lowered its guidance for Namenda, which is currently the main contributor to the company's top line. The performance of new products, especially Teflaro, has also been below expectations. However, we remain encouraged by the company's progress with its pipeline candidates.

Pharma stocks which currently look attractive are Ironwood Pharmaceuticals ( IRWD ) and Valeant Pharmaceuticals ( VRX ), which carry a Zacks Rank #1 (Strong Buy).

FOREST LABS A (FRX): Free Stock Analysis Report

IRONWOOD PHARMA (IRWD): Free Stock Analysis Report

VALEANT PHARMA (VRX): Free Stock Analysis Report

WATSON PHARMA (WPI): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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