Forest Labs Cuts Outlook

Forest Laboratories

(FRX)

said Wednesday that two recent marketing deals will force the company to reduce its earnings guidance for the fourth quarter and fiscal year each by 29 cents a share.

The company's fiscal year ends March 31. The New York-based drugmaker's announcement, which came after the markets had closed, means that Forest expects fourth-quarter earnings will be 22 cents a share and its fiscal-year profit will be $2.01. The fiscal-year guidance excludes a tax benefit of 10 cents a share that was recorded in the first quarter.

The marketing deals called for upfront payments to two companies during the quarter, raising Forest's R&D expenses to $405 million from $285 million. The payments are booked as R&D expenses because the drugs covered in these transactions are still experimental.

Forest paid

Mylan Laboratories

(MYL) - Get Free Report

$75 million as part of an agreement to develop and market a blood-pressure drug. Forest also has paid $50 million to

Replidyne

, a privately held Louisville, Colo., company, to develop and market an antibiotic for treating lung, sinus and skin infections.

Forest's stock gained 76 cents, or 1.6%, to close at $47.26.

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