Updated from 8:43 a.m. EDTForest Laboratories ( FRX) said its fiscal-year forecast would be lower than the company previously planned, sending its shares lower Tuesday. The New York-based drugmaker said revenue for the year ending March 31 would be around $3 billion. Forest previously predicted that fiscal-year revenue would be slightly better than the previous year's $3.16 billion. The Wall Street consensus estimate is $3.07 billion. Forest said earnings were still on track to meet its expectation of $2.30, excluding special items. Analysts polled by Thomson First Call expect an EPS of $2.32. A one-time tax benefit will push the full-year EPS to $2.40, Forest said. The benefit relates to Forest repatriating earnings from foreign divisions under a one-time tax holiday law signed by President Bush last year. The law reduces the tax to 5.25% from 35%. Forest's shares were lately down 88 cents, or 2.4%, to $35.47, after having fallen as low as $34.68. The company issued its fiscal-year forecast as it released second-quarter financial results. Quarterly earnings beat Wall Street's consensus estimate, but revenue fell below the average prediction. Forest earned $204.9 million, or 59 cents a share, on revenue of $736.5 million for the three months ended Sept. 30. The Thomson First Call consensus expected a profit of $189 million, or 56 cents a share, on revenue of $751.6 million. For the same period last year, Forest earned $295.3 million, or 79 cents, on revenue of $856.7 million. Forest's weaker performance vs. the same period last year was a mixture of the expected and the unexpected. Forest had been expecting a beating for its antidepressant Celexa, which is subject to many generic competitors. Celexa produced only $5.1 million in sales for the second quarter, where as for the same period last year, Celexa recorded $256.4 million.
The disappointments came from Forest's biggest drug, the antidepressant Lexapro, and one of its newest drugs, the prescription painkiller Combunox. Lexapro was good for $467.4 million in sales, up from $414.9 million for the same period last year. But the drug's U.S. market share is just over 20% and below the 21.5% that Forest has predicted for the fiscal year, said Kenneth E. Goodman, the president and chief operating officer. He expects fiscal-year Lexapro revenue to be "slightly above" $1.9 billion. The company previously predicted Lexapro would yield "slightly less" than $2 billion. Goodman added that Forest has lowered its revenue forecast for Combunox, saying sales trends are "significantly under plan" and could fall $75 million below estimates for the fiscal year. He also said the company is discussing with several unnamed firms the possibility of licensing certain experimental compounds. Forest continues to talk to the Food and Drug Administration about expanding the use of the Alzheimer's disease drug Namenda, Goodman said. The drug is approved for moderate to severe forms of the disease, but in July,
the FDA rejected Forest's application that Namenda be used to treat a mild version of the disease. Second-quarter Namenda sales rose 53% to $123.9 million from the year-ago quarter.