Forest Labs Net Down 37% On Licensing Charge, Upgrades Fiscal Year View

   DOW JONES NEWSWIRES 
 

Forest Laboratories Inc.'s (FRX) fiscal third-quarter net income fell 37% on a product-licensing charge as the company raised its fiscal-year view by 5 cents a share to reflect reduced research-and-development spending.

Shares of Forest Labs, which now expects fiscal-year earnings of $3.35 to $3.45, were up 4.8% at $27 in premarket trading as the latest quarter's results topped analysts' expectations.

For the period ended Dec. 31, Forest Labs reported net income of $188 million, or 62 cents a share, down from $301.8 million, or 96 cents a share, a year earlier. Excluding the charge for new-product licensing fees, earnings were $1.03.

Revenue was flat at $998 million.

Analysts expected earnings of 76 cents on revenue of $994 million.

Sales of Forest Labs' two biggest-selling drugs were mixed. Lexapro, used to treat depression, had a 3% drop as the drug's market share in the anti-depressant category decreased. Namenda, a treatment for Alzheimer's and dementia, rose 10%. Lexapro, which the company sells for Denmark's H. Lundbeck AS (HLUKY) in the U.S., accounts for about 60% of Forest Labs' revenue.

Earlier this month, the Food and Drug Administration approved a proposed drug by Forest Labs and Cypress Bioscience Inc. (CYPB) to treat fibromyalgia. The FDA had delayed a decision on the drug in October, requesting the two companies to submit more information in support of the drug, milnacipran. When the drug is launched in March, it will compete with Pfizer Inc.'s (PFE) Lyrica, the only other FDA-approved drug in that category.

Forest Labs, which had been boosting its pipeline through acquisitions, could find that strategy frozen for the time being. Most specialty pharmaceutical companies carry lower credit ratings that result in limited access to the already tight capital markets.

-By Kerry E. Grace, Dow Jones Newswires; 201-938-5089; [e-mail]

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