Forest Laboratories, Inc. (FRX) recently suffered a setback when its mid-stage pain drug candidate failed to achieve the primary endpoint in a phase II study. Radiprodil (RGH-896) is being developed under a collaboration agreement with Gedeon Richter.

Top-line results demonstrated that radiprodil failed to show statistically significant or clinically meaningful reductions in the primary endpoint (mean daily pain scores) compared to placebo.

The results were presented from a placebo and positive comparator-controlled, parallel-arm, double-blind, dose-response study that was conducted to evaluate the candidate for the treatment of neuropathic pain associated with diabetic peripheral neuropathy.

Three doses (15mg, 30mg, and 45mg) of radiprodil were evaluated in the study which was conducted with 458 patients who were randomized to receive either radiprodil, or Pfizer’s (PFE) Lyrica or placebo.

Following these disappointing results, Forest Labs and Gideon intend to review the entire database before deciding on the future development path for the candidate. We would not be surprised to see Forest Labs discontinue development of the candidate.

We note that Forest Labs is developing another candidate in collaboration with Gideon. Cariprazine (RGH-188) is being studied for the treatment of schizophrenia, bipolar mania and other psychiatric conditions. The candidate is currently in phase III studies for schizophrenia and bipolar mania disorder.

Cariprazine is also being studied in patients with bipolar depression disorder and as an adjunctive therapy for major depressive disorder. Results from ongoing phase II proof of concept studies should be available in the second half of fiscal 2011.

Neutral on Forest Labs

We currently have a Neutral recommendation on Forest Labs. We are concerned about long-term growth at Forest Labs, especially from 2012 when Lexapro is exposed to generic competition. While Bystolic and Savella should be very meaningful contributors by that time, we believe that their combined sales will not be enough to compensate for the loss of Lexapro sales. That puts a lot of pressure on the pipeline to come through.
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