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US Launch of Forest's Namenda XR

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Forest Laboratories, Inc. (FRX) recently announced the launch of its Alzheimer’s drug, Namenda XR, in the US.

Namenda XR (28 mg) is a once-daily extended-release version of the company’s immediate release (IR) formulation of Namenda. Namenda XR is approved for the treatment of moderate to severe dementia of the Alzheimer’s type and is available at a higher dose than Namenda IR.

Namenda IR is a top revenue earner for Forest Labs with fiscal 2013 sales coming in at $1.5 billion, up 7.1%. However, the drug will lose patent protection and face generic competition from Jan 2015. Forest Labs is working on protecting the Namenda franchise from generics by switching users to the new once-daily formulation.

Forest Labs also has a deal with Adamas Pharma for the development of a fixed dosed combination of Namenda XR and donepezil HCl for the once-daily treatment of moderate to severe dementia of the Alzheimer’s type. The companies are currently expecting to launch the combination in calendar 2015.

On its fourth quarter fiscal 2013 call, Forest Labs said that it is looking to convert 10% to 15% of Namenda IR users to the XR formulation within Apr 2014 and 20% to 30% in the following 18 - 24 months. Namenda sales (including Namenda XR) are expected to increase 8.3% to $1.625 billion in fiscal 2014.

Forest Labs currently carries a Zacks Rank #3 (Hold). The company is facing tough times with Lexapro losing patent protection. Moreover, the performance of new products, especially Teflaro, has been below expectations. We also remain concerned about rising expenses. However, we remain encouraged by Forest Labs’ progress with its pipeline candidates.

Forest Labs has been pretty successful in gaining regulatory approval for several products over the last few years and has an important regulatory event coming up next month with the FDA slated to respond on the company’s marking application for levomilnacipran.

At present, companies like Santarus, Inc. (SNTS), Jazz Pharmaceuticals (JAZZ), and Salix Pharmaceuticals (SLXP) look well-positioned with all three carrying a Zacks Rank #1 (Strong Buy).

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