Did Forest Labs Just Fumble on the Goal Line?
The patent cliff is something that all successful biopharmaceutical companies will deal with at some point in their existence. Last year and this year has brought the largest wave of patent expirations that the pharmaceutical industry has ever seen. From big to small, no biopharmaceuticals are being spared, including Forest Laboratories .
The perilous patent cliff
Although Forest Labs has regularly escaped the dubious award of being the most perilous pipeline, in January 2012, I couldn't help but point out the precarious state of its pipeline as it relates to patent expirations. At the time, depression drug Lexapro and Alzheimer's treatment Namenda accounted for a whopping 77% of its total sales. Lexapro has since gone to generic form as of March 2012, and Namenda has just two years left before it becomes exposed to generic competition. Not surprisingly, Lexapro sales fell in the second-quarter to just $28 million, from $110 million in the previous year.
Forest Labs is doing everything in its power to help stave off its eventual patent swan dive with the introduction of newer drugs into its pipeline. Tudorza, a drug designed to treat long-term bronchospasm associated with chronic obstructive pulmonary disorder (COPD), saw sales of $15.9 million after being approved by the FDA in Dec. 2012, with Daliresp, its other COPD exacerbation treating drug, delivering sales growth of 35%. Irritable bowel syndrome with constipation and chronic idiopathic constipation drug Linzess, which it co-developed with Ironwood Pharmaceuticals, also saw strong sales of $28.8 million after being approved in December.
Did Forest just fumble on the goal line?
But, not everything is going Forest Labs' way. Just yesterday, Forest Labs and development partner Almirall announced that they would be delaying their new drug application filing for the combination of aclidinium bromide (better known as Tudorza), a long-acting muscarinic antagonist, and formoterol fumarate, a beta agonist, for the long-term treatment of COPD. The reason for the delay relates to chemical, manufacturing, and control (CMC) specifications that the company needs to address that were brought to light in a pre-NDA filing meeting with the FDA.
The news is a double-edged sword for Forest, as it both validates the effectiveness of its combination LAMA-LABA drug in trials in terms of meeting both primary endpoints, including forced expiratory volume (FEV1) one hour after dosing, but questions aspects of the manufacturing process and composition of the drug, which has the potential to take quite some time to get right. Allergan's experimental inhaled migraine medication Levadex, for example, has twice been rejected by the FDA because of manufacturing concerns that still remain unaddressed, which shows that what seems like a relatively easy CMC fix sometimes turns into a logistics and time-oriented nightmare.
I don't believe the NDA delay could have come at a worse possible time given the recent success of GlaxoSmithKline and Theravance's LAMA/LABA COPD program. With long-term maintenance drugs like Merck's Singulair losing patent exclusivity, the market is wide open for newer drugs to grab significant market share. Glaxo and Theravance's newly approved LAMA/LABA treatment, Breo Ellipta, proved effective at reducing flare ups and improving air flow in COPD patients, and has seen peak sales estimates range as high as $4 billion. Furthermore, the two companies have another COPD maintenance drug working its way through the approval process known as Anoro Ellipta.
If Glaxo and Theravance bring two new treatments to market before Forest Labs can even bring its one, then the battle for market share in long-term COPD maintenance may be over before Forest and Almirall's drug is even launched (assuming it's approved). Football season is still weeks away from kickoff, but I'd call that a disappointing red zone fumble for Forest Labs.
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The article Did Forest Labs Just Fumble on the Goal Line? originally appeared on Fool.com.Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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