Forest Laboratories, Inc. (FRX)
F1Q11 (Qtr End 6/30/10) Earnings Call
July 20, 2010 10:00 a.m. ET
Frank Murdolo – VP, IR
Larry Olanoff – President and COO
Frank Perier – SVP, Finance and CF
Chris Schott – JPMorgan
Gregg Gilbert – Bank of America/Merrill Lynch
David Risinger – Morgan Stanley
Marc Goodman – UBS
John Boris – Citi Investment Research
Mario Corso – Caris & Company
Arina Ripkin – Williams
Rich Silver – Barclays Capital
Corey Davis – Natixis
Tim Chiang – Natexis Bleichroeder
Rick Pinkerton – Sun Trust
David Buck – Buckingham Research
Annabel Samimy – Stifel Nicolaus
Previous Statements by FRX
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Good morning. My name is Sara, and I will be your conference operator today. At this time I would like to welcome everyone to the Forest Laboratories First Quarter Fiscal Year 2011 Earnings Call. (Operator Instructions)
Thank you Mr. Murdolo. You may begin your conference.
Thank you, and good morning everyone. Thank you for joining us today for this First Quarter Fiscal 2011 Conference Call.
Joining me today is Larry Olanoff, our President and Chief Operating Officer, and Frank Perier, our Senior Vice President of Finance and Chief Financial Officer.
By now, each of you should have seen the earnings release that we put on the wires around 8:00 a.m. this morning. The release is available also at our website, www.FRX.com.
By way of Safe Harbor Statement, let me add that the various remarks that we may make about future expectations, plans and prospects for the company constitute forward-looking statements within the media of the Private Securities Litigation Reform Act of 1995, and actual results may vary.
Let me now turn the call over to Larry, who will comment on the business during the quarter.
Good morning everyone. I will start today’s call by reviewing key company events for the quarter, and then turn the call over to Frank Perier who will review the financial details of the quarter.
Our underlying business continued to perform very well during the quarter for our key marketed products.
Lexapro sales were stable despite the modest expected decrease in market share, and we saw continued solid prescription growth for Namenda, Bystolic and our newest product Savella.
Excluding the $194.4 million charge taken in the just-completed quarter, earnings for the quarter totaled $0.95 per share. The charges for the first quarter are in connection with this morning’s announcement of an Agreement in Principle with the US Department of Justice to resolve all matters arising out of the investigations led by the Department of Justice and the US Attorney’s Office for the District of Massachusetts. And for the previously-announced licensing agreement with Trans Tech Pharma for the development and commercialization of a novel class of glucose-lowering agents for the treatment of diabetes.
We have had a busy quarter, including the receipt of a complete response letter from the FDA following their review of the NDA for Daxas.
In the complete response letter, the FDA requested certain additional information in analyses, but did not request any additional patient trials for their continued review of the NDA.
We are currently preparing our response to the FDA and expect to submit the additional information analysis later this calendar quarter.
We also received FDA approval in June for Namenda XR, for the treatment of moderate-to-severe dementia of the Alzheimer’s type. Namenda XR is a 28-milligram, once daily, extended-release formulation of memantine. We are currently determining the appropriate commercialization strategy and market timing for the launch of Namenda XR to best assure the continued growth and success of this franchise.
Regarding our in-line products, Lexapro sales in the quarter totaled $565.2 million dollars, unchanged from the year-ago period. The additional depression indication in adolescence, along with continued general market growth is helping to maintain Lexapro revenues in the current marketplace.
We have reduced the anticipated increase in share for that in patient population while achieving increased coverage in State Medicaid plans in parallel.
Sales of Namenda were $307.8 million. Growth of 18.7% year over year. Combination use with an acetylcholinesterase inhibitor remains the most widely-applied dosing regiment, and accounts for some 60% of total Namenda use.
Bystolic had sales in the quarter of $59.5 million. This compares to sales of $37.7 million in the year-ago period. Bystolic sales continue to perform strongly and we continue to see an encouraging mix of patients, including significant proportions of those switching from generic beta-blockers, and those new to beta-blocker therapy.
Our approach to physicians has been to emphasize the use of Bystolic as the first add-on agent to standardize first-line agents. And this message appears to be increasingly well received and represents a significant change in the beta-blocker treatment regiment for hypertensive patients.
Bystolic has a growing base of approximately 150,000 prescribers with approximately 85% of these being repeat riders. Both primary care physicians and cardiologists are prescribing the product and share amongst cardiologists continues to see that of a national share of Bystolic.
Since launch in 2008, approximately 870,000 patients have filled a Bystolic prescription.
Overall, on the managed-care front, our access without any step edit or prior authorization restrictions covers over 85% of total beta-blocker lives. Bystolic has unrestricted Tier 2 access now on 18 major national health plans, and is the preferred brand at many of the major national plans.
Turning to Savella, which we launched in April, 2009, sales in the current quarter were $20.5 million. Our broad-based early-experienced sampling program and general-promotional activities have succeeded in driving patient and physician experience with Savella. And we continue to be encouraged by the solid update and the positive response to Savella’s profile and performance with both specialists and general practitioners.