FRX Forest Road Acquisition Corp

Forest Laboratories, Inc. (FRX) recently announced the launch of Viibryd (vilazodone HCl) tablets in the US. Viibryd, which is approved for the treatment of adults with major depressive disorder, is available at pharmacies across the US. 

FDA Approval in Jan 2011

Viibryd received approval from the US Food and Drug Administration (FDA) on Jan 21, 2011. Viibryd became a part of Forest Lab’s portfolio following its acquisition of Clinical Data earlier this year.

Besides Viibryd, Forest Labs also gained access to other candidates including phase III candidate, Stedivaze, through this acquisition. Stedivaze is in development as a pharmacologic stress agent for radionuclide myocardial perfusion imaging (MPI). The company expects to launch this product by 2014.

We believe Forest Labs is well-positioned for the commercialization of Viibryd given its strong presence in the anti-depressant market with products like Celexa and Lexapro in its portfolio. According to Forest Labs, major depressive disorder affects more than 15 million adults (approximately 6.5% of the adult US population) in the US annually.

While we believe Viibryd is a good fit in Forest Lab’s portfolio, we note that Viibryd will be entering a highly genericized market which may make it challenging for the product to gain share.

Neutral on Forest Labs

We currently have a Neutral recommendation on Forest Labs, which carries a Zacks #3 Rank (short-term “Hold” rating). With Lexapro slated to lose exclusivity in 2012, Forest Labs has been pursuing in-licensing deals and acquisitions to grow its pipeline and make up for the loss of revenues once generics arrive. The generic exposure faced by Lexapro in 2012 is a matter of major concern. Moreover, Namenda will face generic competition in early 2015 - this puts another $1+ billion at risk.

 
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