* Generics cheaper than expected, Lexapro sales slide 93 pct
* Alzheimer's drug sales disappoint too, shares drop 3.2 pct
* Cowen & Co. analysts cut rating on Forest shares
By Susan Kelly
Oct 16 Forest Laboratories Inc, hit hard
by generic rivals to its antidepressant Lexapro, posted a sharp
drop in quarterly profit on Tuesday and forecast full-year
results below analysts' estimates.
Shares slid about 3 percent. Forest Labs said price
discounting on generic Lexapro was greater than expected. Sales
of Lexapro, which lost patent protection in March, slid to $44.7
million in the second quarter, down 93 percent from a year ago.
Activist investor Carl Icahn has criticized Forest Labs as
ill-prepared to generate new growth in the face of increasing
competition for its top products.
The company also said sales of its Alzheimer's drug Namenda
were weaker than expected as changing approaches to treating
dementia patients in nursing homes reduced demand for
Cowen & Co. analysts cut their rating on Forest shares to
neutral from outperform after the earnings release.
Leerink Swann analyst Seamus Fernandez called the quarter's
results mediocre and the outlook disappointing.
"Today's results reinforce activist investors' position
around Forest," Fernandez said in a note to clients.
In August, after a bitter proxy battle, Icahn secured one of
four seats he had sought on Forest's board with the election of
former drug executive Pierre Legault.
Forest Labs said it has five new products on the market that
are showing strong growth and received regulatory approval for
two new drugs during the quarter. Forest also has submitted an
application seeking approval for a third new treatment and
expects to submit an application for a fourth by year-end.
"We believe we are well on track to secure the sales and
earnings to build long-term growth well into the future," Forest
Chief Financial Officer Frank Perier said on a conference call
Forest Labs now expects earnings per share, excluding
special items, of 45 cents to 60 cents for the fiscal year
ending March 31. Analysts had estimated earnings of 66 cents per
share, according to Thomson Reuters I/B/E/S.
The company lowered its full-year growth outlook for sales
of Namenda to 11 percent from the 17 percent increase it
Net income for the second quarter, ended Sept. 30, fell to
$20.8 million, or 8 cents per share, from $249.8 million, or 91
cents per share, a year earlier.
Excluding special items, the company earned 15 cents per
Analysts had expected a loss of 1 cent per share on revenue
of $770.3 million, according to Thomson Reuters I/B/E/S.
Net sales in the quarter fell 38.8 percent to $692 million.
Sales of Namenda rose 9.1 percent to $367.6 million. Lexapro
sales dropped to $44.7 million from $596.1 million a year ago.
Sales of blood pressure drug Bystolic, rose 29.4 percent to
Perier said Forest's focus on drugs prescribed in primary
care settings sets it apart from other drugmakers, which are
abandoning that approach due to a lack of new products.
"We continue to believe that we can generate significant
growth in both sales and earnings over the next five years and
can do it with the resources and the structure that we have in
place," he told analysts.
The company received approval for two new drugs during the
quarter: Tudorza, a long-acting inhaled treatment for COPD, and
Linzess for irritable bowel syndrome and chronic constipation.
The company also submitted an application to U.S. regulators
seeking approval for levomilnacipran, a treatment for major
depression, and is on track to submit an application by the end
of 2012 for schizophrenia treatment cariprazine. It hopes to
launch those drugs in fiscal 2014 and said it expects to have
1,500 sales representatives supporting the rollout of each
Shares of Forest Labs fell $1.17, or about 3.2 percent, to
close at $35.43 on the New York Stock Exchange.