FRX Presents Encouraging Data

We are pleased to hear that Forest Laboratories (FRX - Analyst Report) presented encouraging data from its phase III trial of ceftaroline for the treatment of community-acquired pneumonia (CAP) in hospitalized patients. The company presented new data from two multicenter studies – FOCUS 1 and FOCUS 2 – at the 49th Interscience Conference on Antimicrobial Agents and Chemotherapy (ICAAC) in San Francisco. In addition to CAP, ceftaroline is also being studied for complicated skin and skin structure infections (cSSSI) caused by gram-positive bacteria.

The randomized, double-blind trial compared ceftaroline with ceftriaxone in hospitalized adult patients with moderate to severe CAP. Following both the trials, it was found that patients treated with ceftaroline demonstrated a better cure rate (84.3%) compared to those treated with ceftriaxone (77.7%). In addition, the overall microbiological response rate in the microbiologically evaluable (ME) population was 87% for ceftaroline and 81% for ceftriaxone, while in the microbiological modified intent-to-treat (MITT) population it was 84.8% for ceftaroline and 80.4% for ceftriaxone. 

Based on the positive result, Forest expects to file a New Drug Application (NDA) with the US Food and Drug Administration (FDA) for ceftaroline for the treatment of both cSSSI and CAP by year end.

Earlier, in August, Forest entered into a deal with AstraZeneca (AZN - Analyst Report) for ceftaroline. The contract involves co-development and commercialization of the drug in all markets other than the U.S. , Canada and Japan . We believe the deal to be quite beneficial for Forest as the company will receive substantial funds from its partner through signing fee, royalties from sales and payments tied to certain specific sales milestones.

On approval, ceftaroline will have to face tough competition from several players especially from Pfizer’s (PFE - Analyst Report) Zyvox and Wyeth’s (WYE) Tygacil. The latest drug to get FDA approval for the treatment of infection caused by gram-positive bacteria is Theravance’s (THRX - Analyst Report) Vibativ. There are many pipeline candidates as well, including Johnson & Johnson’s (JNJ - Analyst Report) ceftobiprole.

We are concerned about longer-term growth of Forest, especially towards the beginning of the next decade when Lexapro, which accounts for over half of the company’s top line, gets exposed to generic competition. That puts a lot of pressure on the pipeline to come through.

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