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Forest Labs earnings fall in Q2

Forest Laboratories has reported a drop in Q2 earnings, due mainly to settlements involving drugs Lexapro, Celexa and Levothroid

Forest Laboratories has reported a year-on-year drop in Q2 earnings. This was due mainly to a charge taken by the company in relation to the settlement of a government investigation into its marketing and promotional practices for the antidepressants Lexapro (escitalopram) and Celexa (citalopram) and the hypothyroidism treatment Levothroid (levothyroxine).

Net income for the quarter ended June 30, 2010 was $117.5m, or 39 cents per share, down from $262.9m, or 87 cents per share, in the same period of 2009.

Forest took a charge of 39 cents per share related to the settlement, and has taken a reserve of $313m in connection with the ongoing investigations. The company said it has reached an agreement in principal with the US Department of Justice (DOJ) to resolve all aspects of the investigations led by the DOJ and the US Attorney's Office for the District of Massachusetts. 

Excluding the charge related to the investigations and a charge of $50m related to an agreement with TransTech Pharma for diabetes treatments, EPS in the Q2 would have come in at 95 cents.

Net sales for the quarter increased 7.6 per cent to $1.0bn from $948.2m in the same period in 2009.

"As we continue into fiscal 2011, our focus will remain on moving our significant product development pipeline forward, making this another very busy period for us," Forest president and CEO Larry Olanoff said during a conference call with financial analysts and the media.

He promised "important phase II and phase III clinical data in the upcoming months" for the chronic obstructive pulmonary disease (COPD) drug aclidinium, the bipolar depression drug cariprazine, the antidepressant levomilnacipran and the chronic constipation drug linaclotide. Forest expects to file US marketing applications for cariprazine and levomilnacipran in 2012.

Orlanoff added that the company expects US Food and Drug Administration (FDA) action on its marketing applications for the antibiotic ceftaroline and the COPD drug Daxas (roflumilast) in the near future.

Olanoff said Forest believes its new and soon-to-launch products "could collectively represent several billion dollars of potential product sales in the long term, sufficient over time to replace the revenues lost due to patent expiration for Lexapro in 2012 and [the Alzheimer's drug] Namenda (memantine) in 2015."

"One of our strategic goals has been to double the commercial value of our late-stage product pipeline by 2012 through the addition of new product development opportunities, both licensed and acquired, and the advancement of our earlier-stage products," the CEO added.

21st July 2010

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