Forest Laboratories Inc. (FRX) recently announced that it has submitted a response to the complete response letter (CRL) issued by the US Food and Drug Administration (FDA) in mid-May for Daxas (roflumilast). Forest Labs and partner, Nycomed GmbH, are looking to get Daxas approved for the treatment of reduction of chronic obstructive pulmonary disease (COPD) exacerbations associated with chronic bronchitis in patients at risk of exacerbations.
Earlier this year, the FDA's Pulmonary-Allergy Drugs Advisory committee had reviewed Forest Labs' new drug application (NDA) for Daxas and had voted 10-5 against approving the candidate for the treatment of COPD.
At that time, concerns were raised regarding the risk-benefit profile of the drug. The FDA had noted that while Daxas achieved statistical significance in clinical studies, the improvements were modest. Moreover, the agency had also expressed concern regarding the safety profile of Daxas.
In addition to the frequent and sometimes severe gastrointestinal toxicities observed with the use of PDE4 inhibitors like Daxas, the FDA had raised questions about the occurrence of psychiatric adverse events like suicide. While three people with no previous history of depression committed suicide, two patients who had prior psychiatric histories tried to kill themselves.
Forest Labs' response to the candidate is being treated as a complete, class 2 response which means that the FDA's response regarding the approvability of Daxas should be out in the first quarter of 2011. The response to the CRL includes additional information and analyses which had been requested by the regulatory body.
Neutral on Forest Labs
Earlier this year, the FDA's Pulmonary-Allergy Drugs Advisory committee had reviewed Forest Labs' new drug application (NDA) for Daxas and had voted 10-5 against approving the candidate for the treatment of COPD.
At that time, concerns were raised regarding the risk-benefit profile of the drug. The FDA had noted that while Daxas achieved statistical significance in clinical studies, the improvements were modest. Moreover, the agency had also expressed concern regarding the safety profile of Daxas.
In addition to the frequent and sometimes severe gastrointestinal toxicities observed with the use of PDE4 inhibitors like Daxas, the FDA had raised questions about the occurrence of psychiatric adverse events like suicide. While three people with no previous history of depression committed suicide, two patients who had prior psychiatric histories tried to kill themselves.
Forest Labs' response to the candidate is being treated as a complete, class 2 response which means that the FDA's response regarding the approvability of Daxas should be out in the first quarter of 2011. The response to the CRL includes additional information and analyses which had been requested by the regulatory body.
Neutral on Forest Labs
We currently have a Neutral recommendation on Forest Labs, which is supported by a Zacks #3 Rank (short-term Hold rating). We remain concerned about the strength of the company's pipeline relative to the loss in sales that will come with the Lexapro (2012) and Namenda (2015) patent expirations. With Lexapro losing patent protection in March 2012, roughly half of the company's top-line will be at risk to generic competition.
While Bystolic and Savella should be very meaningful contributors by that time, we believe that their combined sales will not be enough to compensate for the loss of Lexapro sales. Namenda will face generic competition in early 2015 – this puts another $1+ billion at risk.
Given the situation, we believe that Forest Labs will continue to seek in-licensing and acquisition activities 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.FOREST LABS A (FRX): Free Stock Analysis Report
Zacks Investment Research
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