Forest Laboratories (NYSE:FRX) revealed weaker-than-expected third-quarter earnings on Tuesday and lowered its fiscal 2013 guidance as it continued to struggle under the so-called patent cliff and invested in research and development.
The New York-based drug maker reported a loss of $153.6 million, or 58 cents a share, compared with a year-earlier profit of $278.4 million, or $1.04.
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Excluding one-time items such as payments totaling $76 million related to licensing agreements, Forest Labs said it lost 21 cents, below average analyst estimates in a Thomson Reuters poll of a 14-cent loss.
Revenue for the three-month period tumbled 41.6% to $678 million from $1.2 billion in the year-earlier period, hurt by patent expirations of some of its blockbuster drugs. The Street was calling for slightly stronger sales of $762 million.
“In the third quarter of fiscal 2013, as expected, we incurred a loss resulting principally from sales lost following the expiration of Lexapro’s patent exclusivity in March 2012,” Forest CEO Howard Solomon.
While sales of Alzheimer’s disease treatment Namenda grew 1.6% to $345.8 million during the quarter despite higher contract rebates, Forest Lab’s anxiety drug, Lexapro, saw sales shrink to just $20.3 million due to the patent cliff from $593 million a year ago.
Earnings were further impacted by higher costs as the company continued to spend more on researching and developing new drugs as it looks to reinvigorate its pipeline. Selling, general and administrative expenses were $428.4 million, up from $396.1 million a year ago, while R&D spending was up $325.3 million from $191.3 million.
In December, the pharmaceutical giant launched two new products, Tudorza and Linzess, and said it believes those treatments and the seven products already launched this fiscal year will ultimately “equal and exceed the sales lost following the expiration of Lexapro’s exclusivity” and the potential loss of Namenda’s exclusivity down the road.
Looking toward the fiscal 2013 period, Forest said it expects non-GAAP EPS to be at the lower end of an earlier provided range of 45 cents to 60 cents with revenue between $3.1 billion and $3.2 billion.
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