Pharmaceutical company Forest Laboratories, Inc. (FRX) Tuesday reported a rise in third quarter net profit, sales grew year-on-year. The growth primarily reflected sales increases from its Alzheimer's drug Namenda and hyper-tension treatment Bystolic as well as higher contract revenues. Adjusted earnings, although declined, surpassed Street view by a wide margin.
For the third quarter, the New York-based company's net earnings were $210.23 million or $0.69 per share as compared with $187.98 million or $0.62 per share in the prior-year period.
Results for the quarter included a new product license fee of $75.0 million or $0.25 per share with regard to previously announced product licensing deal with Almirall, S.A., and certain restructuring costs related to Forest Lab's Long Island packaging facility of $14.0 million or $0.03 per share.
On an adjusted basis, net income was $0.97 per share versus $1.03 per share a year earlier. On an average, 27 analysts polled by Thomson Reuters expected Forest Lab to earn $0.86 per share for the quarter. Analysts' estimates typically exclude special items.
Net revenues for the period increased to $1.06 billion from $997.96 million in the third quarter of fiscal 2009. The company's net sales was $997.00 million, up 8.4% from $920.01 million last year. Analysts expected Forest Lab to generate revenues of $1.04 billion for the quarter.
Contract revenues rose 6.5% to $55.76 million from $52.43 million in the prior year, principally due to Benicar co-promotion income growth of 9.1% compared to last year's third quarter.
Sales of Lexapro, an SSRI for initial and maintenance treatment of major depressive disorder, was $582.6 million, a 0.5% decrease from the previous year quarter. Namenda, an NMDA receptor antagonist for moderate and severe Alzheimer's disease treatment, recorded sales of $282.5 million during the quarter, up 17.3% from last year's third quarter.
Sales of Bystolic, a beta-blocker for hypertension treatment, surged to $47.5 million from $21.0 million in the comparable period prior year. Forest Lab's newest product Savella, a selective serotonin norepinephrine dual reuptake inhibitor for management of fibromyalgia, recorded sales of $15.4 million for the quarter.
During the three-month period, total costs and expenses rose to $788.22 million from $775.67 million last year, reflecting a one-time restructuring charge. Selling, general and administrative costs increased to $306.96 million from $289.97 million in the previous year. However, research and development expenses declined to $233.61 million from $279.05 million in the same period last year.
For the three-month period, Forest Lab's income tax expense was $66.2 million, reflecting a quarterly effective tax rate of 24.0%. The company attributed the higher quarterly rate to the upfront fee for product licensing agreement transaction during the quarter.
During the quarter, Forest Lab submitted a New Drug Application for ceftaroline, its novel cephalosporin for the treatment of patients suffering from complicated skin structure and skin infections, community acquired bacterial pneumonia, and for patients infected with methicillin-resistant Staphylococcus aureus.
In the preceding second quarter, the company reported a net income of $186.66 million or $0.61 per share compared with an income of $244.09 million or $0.80 per share in the same quarter a year ago. Revenues for the quarter rose to $1.06 billion from $992.51 million in the second quarter of fiscal 2009.
For the nine-month period, Forest Lab's net earnings declined 2.3% to $659.79 million from $674.98 million in the prior-year period. On a per share basis, net earnings were down to $2.17 from $2.21 in the previous-year period. Adjusted earnings fell to $2.69 per share from $2.70 per share in the corresponding period last year. Year-to-date, net revenues were $3.14 billion compared to $2.96 billion a year ago. Net sales for the period increased to $2.91 billion from $2.74 billion in the 2009-year period.
Further, chairman and chief executive officer Howard Solomon said, "We were also delighted to announce the expansion of our recently established relationship with AstraZeneca to collaborate with them in the anti-infective therapeutic area to help patients suffering from serious infections. This transaction broadens our partnership beyond just ceftaroline to now include ceftaroline/NXL104, and ceftazidime/NXL104."
Forest Lab expects the transaction to close in its fiscal fourth quarter following satisfaction of customary closing conditions, including expiration of applicable waiting period under Hart-Scott-Rodino Antitrust Improvements Act of 1976.
FRX is currently trading on the New York Stock Exchange at $31.36 per share up $0.70 or 2.28% on a volume of 781,181 shares. In the past 52-week period, the shares have been trading in a range of $18.37 to $33.10.
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