(Adds analyst comments, details on drug, byline, shares)
By Lewis Krauskopf
NEW YORK, Dec 22 (Reuters) - Forest Laboratories Inc FRX.N will pay at least $75 million to Pierre Fabre Medicament for North American rights to the French company’s experimental anti-depressant, the companies said on Monday.
The deal could help New York-based Forest at least partially replace lost sales from its huge-selling Lexapro anti-depressant when the drug loses U.S. patent protection in early 2012.
Late-stage testing for the drug, F2695, is expected to begin next year after the drug showed effectiveness in a mid-stage study of 550 patients with major depressive disorder.
In addition to the initial $75 million payment, Forest will also make future payments should F2695 reach certain milestones.
Jefferies & Co analyst David Windley said the deal marks the “first time we’ve really seen them make a deal that attempts to defend the anti-depressant franchise that has been the pillar for them for years now.”
Forest expects to seek U.S. approval in 2012 for the drug, which is taken once a day, a company spokesman said.
That timing means that Lexapro could lose patent protection and see low-cost generic competition before F2695 can be approved, making it tougher for Forest to switch patients to the new product, Windley said.
Windley said F2695 was “one of many” products the company is trying to bring to market to make up for when Lexapro and its second-biggest product, the Alzheimer’s treatment Namenda, lose patent protection in the next few years.
“I think it’s only a replacement for a portion of Lexapro,” Windley said.
Several analysts also questioned the strength of the patents that would protect F2695 from generic competition.
As part of the deal, Forest assumes responsibility for the clinical development and commercialization of F2695 in the United States and Canada, while Pierre Fabre will fund preclinical development and drug substance manufacturing activities worldwide, the companies said in a joint statement.
F2695 is a chemical cousin of milnacipran, which Forest has been developing as a treatment for the pain condition fibromyalgia with Pierre and Cypress Bioscience Inc CYPB.O. The U.S. Food and Drug Administration is reviewing the application for milnacipran.
F2695 and milnacipran are both in the class of drugs known as selective norepinephrine and serotonin reuptake inhibitors, or SNRIs, which interact with two neurotransmitters. Two other widely used anti-depressants, Wyeth’s WYE.N Effexor and Eli Lilly’s (LLY.N) Cymbalta, are also SNRIs.
In addition to Lexapro, Forest also sold the big-selling Celexa anti-depressant, which is now available in generic forms.
“We like this deal as Forest has deep anti-depressant expertise and relationships, and a strong understanding of the molecule,” UBS analyst Annabel Samimy said in a research note.
Forest shares were down 33 cents, or 1.3 percent, to $24.34 in afternoon trading on the New York Stock Exchange. (Editing by Derek Caney)