FDA Deals Forest Labs a Setback

Forest Laboratories (FRX) said the Food and Drug Administration rejected the company's application to expand the coverage of its Alzheimer's disease drug Namenda.

The news sent the company's stock down 90 cents, or 2.2%, to $39.50 Monday.

Although Namenda is the only product approved in the U.S. for moderate to severe Alzheimer's disease, the FDA turned down Forest's request that it also be approved for treating mild Alzheimer's. Namenda was approved for treating moderate to severe forms of the disease in October 2003.

Forest said it plans to discuss the rejection with the FDA. The company said the FDA's action won't affect its earnings-per-share forecast of $2.30 for the fiscal year ending March 31, 2006.

According to Forest, the FDA turned down the application despite favorable results of one clinical trial.

"Upon completing its review, the FDA acknowledged that it had informed Forest that a single positive study in patients with mild to moderate Alzheimer's disease would be adequate to support extending Namenda's claim to include mild patients," Forest said. "The FDA further acknowledged that the six-month, U.S. mild-to-moderate study which reached statistical significance at the required primary endpoints was such a study."

However, the FDA rejected the application because two previous clinical trials failed to show a statistically significant benefit for Namenda in patients with mild to moderate Alzheimer's, Forest said. One test was conducted by the Danish drug company H. Lundbeck and another was a previous Forest study testing Namenda in combination with other Alzheimer's drugs.

These studies were included in Forest's petition to the FDA. In both studies, Namenda patients "performed numerically better" than patients taking a placebo, but the tests' primary goals failed to achieve statistical significance, Forest said.

Forest licenses Namenda from the German drug company Merz Pharmaceuticals. It continues to conduct research on neramexane, an experimental Alzheimer's disease drug also licensed from Merz.

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