Forest Laboratories Announces Acquisition of Cerexa, Inc.
December 14 2006 - 8:29AM
PR Newswire (US)
NEW YORK, Dec. 14 /PRNewswire-FirstCall/ -- Forest Laboratories,
Inc. (NYSE:FRX) today announced that it has signed a definitive
merger agreement to acquire Cerexa, Inc., a privately held
biopharmaceutical company based in Alameda, California, in a cash
transaction. Under the terms of the agreement, Forest will acquire
Cerexa for a total of $480 million. (Logo:
http://www.newscom.com/cgi-bin/prnh/20001011/FORESTLOGO ) Pursuant
to the acquisition of Cerexa, Forest will obtain worldwide
development and marketing rights (excluding Japan) to two
injectable antibiotics and an option to a third, early stage
injectable antibiotic. The lead compound, ceftaroline acetate,
which is entering Phase III studies, is a next generation,
broad-spectrum, hospital-based cephalosporin antibiotic that
exhibits bactericidal activity against the most resistant strains
of Gram- positive bacteria, including MRSA (methicillin resistant
Staphylococcus aureus) as demonstrated in a completed Phase II
comparative trial in patients with complicated skin and skin
structure infections (cSSSI). Ceftaroline has also demonstrated
bactericidal activity against penicillin-resistant Streptococcus
pneumoniae (PRSP) and common gram-negative bacteria. Ceftaroline is
being developed for initial indications of cSSSI and community
acquired pneumonia (CAP). Phase III studies for cSSSI are planned
to begin in the first quarter of calendar 2007 while the CAP Phase
III program is scheduled to begin in the second quarter of calendar
2007. In March 2006 the U.S. Food and Drug Administration (FDA)
granted ceftaroline Fast Track designation for the treatment of
cSSSI caused by MRSA. In granting this designation, the FDA noted
that ceftaroline has the potential to address an unmet medical need
due to its potential ability to benefit patients who are
unresponsive to existing therapies or who are unable to tolerate
existing therapies due to serious toxicities that are present in
such therapies. If the Phase III studies are successful and Forest
receives FDA marketing approval, Forest plans to launch ceftaroline
with these two initial, cSSSI and CAP indications in the 2010 or
2011 timeframe. Additional indications will also be pursued under
future supplemental filings. As a hospital-based product Forest
would detail the product utilizing its existing hospital based
salesforce, a subset of the Company's total salesforce. Forest will
also explore options for commercialization outside the U.S.
(excluding Japan) including but not limited to out-licensing
marketing rights or acquiring a non-U.S. hospital-based salesforce.
The second product, ME1036, a broad-spectrum parenteral carbapenem,
is currently in preclinical development and has demonstrated
excellent preclinical activity against both aerobic and anaerobic
Gram-positive and Gram-negative bacteria, including common
drug-resistant pathogens. Unlike carbapenems that are available
today, ME1036 is highly active against MRSA, PRSP,
vancomycin-intermediate susceptible Staphylococcus aureus (VISA)
and vancomycin-resistant Enterococcus faecalis (VRE). For this
product, Forest's marketing rights do not include Japan and certain
other Asian countries. An issued composition of matter patent
covering ceftaroline expires in December 2018 and an extension of
the patent term is expected under the Hatch Waxman legislation.
There are several filed patent applications covering ME1036. The
U.S. market for injectable antibiotics is currently estimated to be
between $5 billion and $7 billion using branded pricing for all
products. Worldwide, the market is estimated to be over $9 billion.
The cash-for-stock transaction is valued at approximately $494
million, which includes related transaction costs and Forest's
payment of certain of Cerexa's transactions fees, and is expected
to close in Forest's fiscal fourth quarter following the expiration
of the Hart-Scott-Rodino antitrust waiting period. Upon closing,
Forest expects to incur a one-time after-tax charge of
approximately $0.96 per share, as substantially all of the purchase
price will be expensed as in-process research and development.
Excluding the one-time after-tax charge the Company reaffirms its
Fiscal 2007 earnings per share guidance of $2.60-$2.65 originally
issued on October 17, 2006. In addition, Forest has committed to
make a future additional one-time payment of $100 million if U.S
product sales of ceftaroline during any twelve-month period within
the first five years following the product launch exceed $500
million. "Ceftaroline is an important late stage development
product that can address serious and life-threatening infections in
the hospital setting including MRSA. This is a significant medical
benefit given the increasing prevalence of MRSA, which commonly
causes severe "staph" infections such as skin infections that are
resistant to treatment with most antibiotics, and the current
limitations of presently available treatment options. We have a
high degree of confidence in the successful commercialization and
financial prospects for ceftaroline given the strength of the
existing clinical data and the clinical need for a next generation
hospital based antibiotic," commented Howard Solomon, Chairman and
CEO of Forest. Mr. Solomon continued: "We are, of course, also
aware of the need to replace earnings from key marketed products
following their patent expirations in the next decade and will
continue to review additional in-licensing and co-promotion
opportunities as well other strategic acquisitions. Our ongoing
business development efforts will continue to assess both near-term
and longer-term commercial opportunities which will serve to
increase shareholder visibility into long- term earnings growth
prospects for Forest." Dennis Podleask, Cerexa's Chief Executive
Officer, added: "We received significant interest in Cerexa from
multiple parties and are delighted to be entering into this
transaction with Forest, who will be assuming responsibility for
the development and future commercialization of ceftaroline. Forest
has a proven track record of success in developing and
commercializing products, as evidenced by the success of the
Lexapro(R) / Celexa(R) franchise, and we have great confidence in
their ability to optimize the therapeutic and commercial potential
of the Cerexa portfolio." About Ceftaroline Ceftaroline acetate is
a member of the cephalosporin class of antibiotics, the most
frequently prescribed class of antibiotics in the world. In
preclinical studies and clinical trials to date, ceftaroline
demonstrated a favorable safety profile, similar to that of
existing cephalosporins. Unlike marketed cephalosporins,
ceftaroline exhibits bactericidal activity against the most
resistant strains of Gram-positive bacteria, including MRSA.
Ceftaroline has also demonstrated bactericidal activity against
penicillin- resistant Streptococcus pneumoniae and common
Gram-negative bacteria. Cerexa licensed from Takeda Pharmaceutical
Company Limited the exclusive right to develop and commercialize
ceftaroline in all countries worldwide except Japan. In a Phase II
randomized, observer-blinded, multi-center trial of 99 treated
patients with local and systemic signs of cSSSI randomized in a 2:1
ratio to receive ceftaroline or a vancomycin based regimen, the
clinical cure rate in the clinically evaluable population was 96.7%
for patients treated with ceftaroline and 88.9% for those treated
with the gold-standard comparator regimen of vancomycin, with or
without adjunctive aztreonam. The microbiological response rate in
the microbiologically evaluable population was 95.2% for the
ceftaroline group and 85.7% for the standard therapy group.
Ceftaroline also demonstrated excellent in vitro activity against
Gram- positive and Gram-negative organisms isolated from patients
in the study, including 100% of methicillin-resistant
Staphylococcus aureus (MRSA) isolates inhibited at 0.5 mg/L or
less. In the Phase 2 trial, no drug-related serious adverse events
were observed for ceftaroline. In both the Phase 2 trial and
earlier Phase 1 trials, ceftaroline displayed a favorable adverse
event profile consistent with the established safety profile of the
cephalosporin class, with the vast majority of side effects being
mild in nature. About Forest Laboratories and Its Products Forest
Laboratories (http://www.frx.com/) is a US-based pharmaceutical
company dedicated to identifying, developing, and delivering
products that make a positive difference in peoples' lives. Forest
Laboratories' growing product line includes Lexapro(R)
(escitalopram oxalate), an SSRI indicated for adults for the
internal and maintenance treatment of major depressive disorder and
generalized anxiety disorder; Namenda(R) (memantine HCl), an
N-methyl D- aspartate (NMDA)-receptor antagonist indicated for the
treatment of moderate to severe Alzheimer's disease; Benicar(R)*
(olmesartan medoxomil), an angiotensin receptor blocker, and
Benicar* HCT(R) (olmesartan medoxomil- hydrochlorothiazide), an
angiotensin receptor blocker and diuretic combination product, each
indicated for the treatment of hypertension; and Campral(R)*
(acamprosate calcium), indicated in combination with psychosocial
support for the maintenance of abstinence from alcohol in patients
with alcohol dependence who are abstinent at treatment initiation.
*Benicar is a registered trademark of Daiichi Sankyo, Inc., and
Campral is a registered trademark of Merck Sante s.a.s., subsidiary
of Merck KGaA, Darmstadt, Germany. Except for the historical
information contained herein, this release contains
"forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. These statements involve
a number of risks and uncertainties, including the difficulty of
predicting FDA approvals, the acceptance and demand for new
pharmaceutical products, the impact of competitive products and
pricing, the timely development and launch of new products, and the
risk factors listed from time to time in the Forest Laboratories'
SEC reports, including the Company's Annual Report on Form 10-K for
the fiscal year ended March 31, 2006 and on Form 10-Q for the
periods ended June 30 and September 30, 2006.
http://www.newscom.com/cgi-bin/prnh/20001011/FORESTLOGODATASOURCE:
Forest Laboratories, Inc. CONTACT: Charles E. Triano, Vice
President - Investor Relations of Forest Laboratories, Inc.,
+1-212-224-6714, Web site: http://www.frx.com/
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