Forest Labs Presents Mixed Data

Recently, Forest Laboratories Inc. (FRX - Analyst Report) announced preliminary top-line data from an 8-week mid-stage study (n=233) of its candidate cariprazine (RGH-188). The study, designed to be exploratory, evaluated the efficacy, safety and tolerability of cariprazine versus placebo in patients suffering from bipolar depression. All 233 patients were enrolled from US clinical sites and were between 18 and 65 years old.

Cariprazine is being developed in collaboration with Gedeon Richter Plc. The candidate is also being evaluated in late-stage studies to combat schizophrenia and bipolar mania.

The randomized double-blind, placebo-controlled, flexible-dose group study, in which the patients were randomized to one of two active (0.25 - 0.75 mg per day of cariprazine or 1.5 - 3.0 mg per day of cariprazine) cohorts or placebo, revealed that the overall results were not statistically different for patients treated with cariprazine as against those treated with placebo. However, the candidate was found to be effective in the high-dose arm and its tolerability called for further investigation.

Approximately 9% of the patients in the high-dose study arm opted out due to adverse events as opposed to 3% in the placebo arm. The co-developers intend to conduct an additional mid-stage dose-response study to evaluate the candidate for a wider range of doses.

Apart from cariprazine Forest Labs has other interesting candidates in its pipeline which, if developed successfully, should help compensate for a part of the loss of revenues that will take place once anti-depressant Lexapro loses exclusivity in 2012.

Furthermore, the strong balance sheet at Forest Lab should encourage the company to continue to seek in-licensing deals and acquisitions to grow its pipeline. In fact, the company’s goal is to double the commercial value of its late-stage pipeline by 2012 through in-licensing deals and acquisitions. Forest Labs has made significant progress in this regard and should be on the lookout for additional deals in the next couple of years.

Our Recommendation

 
Forest Labs is a Zacks #3 Rank (Hold) company, which indicates that the stock is expected to perform in line with the overall US equity market for the next 1 to 3 months. Our long-term Neutral stance on the company indicates that the stock is expected to replicate its short-term performance, but over 6 to 12 months. Consequently, we advise investors to retain the stock over the time-period.

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