Forest Labs-Glenmark Tie Up - Analyst Blog
December 31 2012 - 4:00AM
Zacks
Forest Labs (FRX) and Glenmark Pharmaceuticals
S.A, a wholly owned subsidiary of Glenmark Pharmaceuticals Limited
India, recently signed a collaboration agreement. The companies
will work on the development of novel mPGES-1 inhibitors for the
treatment of chronic inflammatory conditions, including pain.
Potential candidates have already been identified by Glenmark.
Glenmark is conducting pre-clinical studies with these candidates
prior to the initiation of human studies.
Glenmark will receive an upfront payment of $6 million from
Forest Labs. Moreover, Forest Labs will pay $3 million to fund the
next phase of work. Additional payments will be made by Forest Labs
in fiscal 2014 to support the development program. Once phase I
development is completed, Forest Labs has an exclusive option to
acquire licensing rights to the program.
With this deal, Glenmark is gaining a strong commercialization
partner like Forest Labs. Meanwhile, the deal is in line with
Forest Labs’ efforts to expand its pipeline. Forest Labs is facing
tough times with Lexapro losing patent protection. Over the past
few years, Forest Labs has been very active in signing in-licensing
and partnership deals with the intention of expanding its pipeline.
The company has licensing agreements with several companies like
Almirall SA, AstraZeneca (AZN), and
Ironwood Pharma (IRWD) among others.
We currently have a Neutral recommendation on Forest Labs, which
carries a Zacks #3 Rank (Hold). Following the release of second
quarter results, Forest Labs once again cut its outlook for fiscal
2013. More than Lexapro’s genericization, the cut in Namenda’s
guidance is disappointing as Namenda is currently the main
contributor to the company’s top line. Moreover, the performance of
new products especially Teflaro, has been below expectations. We
note that Namenda will face generic competition in early 2015
putting another $1+ billion at risk.
Both Ironwood Pharma and AstraZeneca are Zacks #2 Rank (Buy)
stocks.
ASTRAZENECA PLC (AZN): Free Stock Analysis Report
FOREST LABS A (FRX): Free Stock Analysis Report
IRONWOOD PHARMA (IRWD): Free Stock Analysis Report
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