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Forest Laboratories, Inc. recently announced that its antibiotic candidate, ceftazidime/avibactam, has been designated a qualified infectious disease product (QIDP) by the U.S. Food and Drug Administration (FDA).

The QIDP designation is a part of the Generating Antibiotic Incentives Now (GAIN) Act, which falls under the 2012 FDA Safety and Innovation Act (FDASIA).

With ceftazidime/avibactam being designated a QIDP, Forest Labs will benefit from incentives like priority review, eligibility for the FDA’s fast track program, and a five-year extension of exclusivity under the Hatch-Waxman Act for the candidate.

The QIDP designation has been granted to ceftazidime/avibactam for complicated intra-abdominal infections (cIAI), complicated urinary tract infections (cUTI) and hospital-acquired bacterial pneumonia/ventilator-associated bacterial pneumonia (HABP/VABP).

We note that ceftazidime/avibactam is currently in phase III development for the treatment of hospitalized patients with cIAI and cUTI. Phase II data on ceftazidime/avibactam in patients with cIAI and cUTI showed that ceftazidime/avibactam achieved high clinical cure rates and was well tolerated.

Forest Labs is developing ceftazidime/avibactam under a Dec 2009 agreement with AstraZeneca (AZN - Analyst Report). The companies are sharing the development costs for this candidate. While Forest Labs has commercialization rights in North America, rest of the world commercialization rights are with AstraZeneca.

Forest Labs currently carries a Zacks Rank #2 (Buy). Forest Labs is facing tough times with Lexapro losing exclusivity. Moreover, the performance of new products, especially Teflaro, has been below expectations. Meanwhile, Namenda will face generic competition in early 2015 putting another $1+ billion at risk.

Forest Labs has, however, made significant progress with its pipeline. The company has launched several new products over the past couple of years and is looking to launch additional products going forward.

Other companies that currently look well-positioned include Questcor Pharmaceuticals, Inc. and Elan . While Questcor is a Zacks Rank #1 (Strong Buy) stock, Elan is a Zacks Rank #2 (Buy) stock.

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