* Q3 $1.34/share vs 99 cent Wall St estimate
* Sees fiscal year $4.20-$4.30 per share, above St view
* Namenda sales rise 13 percent
* Shares rise 2.9 percent (Adds analyst, CFO comments; rewrites 1st paragraph)
By Lewis Krauskopf
NEW YORK, Jan 18 (Reuters) - Forest Laboratories Inc FRX.N posted a 53 percent jump in quarterly profit and forecast fiscal-year profit well above analyst targets, as the drugmaker seeks to convince investors it can thrive, even as its two largest products face impending declines in sales.
Forest, whose shares were up 2.9 percent on Tuesday, reported strong sales of its Namenda Alzheimer’s drug, while lower expenses helped the company storm past Wall Street estimates for its fiscal third quarter.
“They really blew out the number,” said Collins Stewart analyst Louise Chen.
Despite Forest’s strong report, investors want to see a strong product portfolio ahead of the patent expiration of anti-depressant Lexapro in early 2012 that could decimate sales of the company’s top-selling product. Namenda’s patent expiration is expected in 2015.
Forest is counting on eight drugs, ranging from those launched in the last couple years to those for which it plans to seek approvals next year.
Chief Financial Officer Frank Perier said on a conference call with analysts that those drugs could collectively “represent several billion dollars of potential sales in the long term, sufficient over time to replace the revenues lost due to patent expiries” for Lexapro and Namenda.
While the stock is still relatively cheap compared with the shares of large drugmakers, Forest shares have run up some 30 percent since last June.
“They have demonstrated they actually have products they can get approved and launched,” Chen said.
Forest said net income rose to $320.7 million, or $1.11 per share for the fiscal third quarter that ended Dec. 31. That compared with $210.2 million, or 69 cents per share, a year earlier.
Excluding a charge tied to a licensing payment, earnings of $1.34 per share topped the average estimate of analysts by 35 cents, according to Thomson Reuters I/B/E/S.
For the quarter, revenue rose about 6 percent to $1.13 billion.
Lexapro sales edged up less than 1 percent to $586.5 million. Namenda sales increased 13 percent to $319.8 million.
The sales of two newer drugs, hypertension drug Bystolic and fibromyalgia therapy Savella, rose sharply, although they remain relatively small. Bystolic sales rose 43 percent to $68.1 million, while Savella jumped 60 percent to $24.6 million.
Forest is launching its newly approved Teflaro antibiotic and expects to hear this quarter from the U.S. Food and Drug Administration on whether its Daxas lung disorder drug wins approval.
Expenses fell about 7 percent, as research and development, as well as sales, general and administrative spending declined.
“The lower operational cost could prove consequential, if they establish a lower baseline going forward,” Sanford Bernstein analyst Ronny Gal said in a research note.
For the fiscal year ending in March, New York-based Forest expects earnings to be between $4.20 and $4.30 per share, excluding certain items. Analysts have been looking for $3.89.
Forest shares were up 92 cents at $32.36 in midday trading on the New York Stock Exchange. (Reporting by Lewis Krauskopf; editing by Maureen Bavdek and Derek Caney)