Forest Laboratories Inc. (FRX) and Ironwood Pharmaceuticals Inc. (IRWD) recently announced positive top-line results from a late-stage trial of linaclotide, which is being studied for the treatment of irritable bowel syndrome with constipation or chronic constipation. The phase III trial (LIN-MD-31) was conducted to access the efficacy and safety of linaclotide compared to placebo.
In addition to meeting all four primary efficacy endpoints, linaclotide also demonstrated significant improvements in the secondary endpoints of the trial including measures of abdominal pain, abdominal discomfort, bloating and bowel symptoms. Safety results of the trial were similar to those observed in previous linaclotide studies.
Forest Labs and Ironwood Pharma are jointly developing the candidate in the United States, while Ironwood Pharma has an agreement with Almirall for the development and commercialization of linaclotide in Europe. Ironwood Pharma and Almirall reported that linaclotide also met its EU endpoints in the phase III study.
Linaclotide is currently in a second phase III trial — top-line results should be out in the fourth quarter of 2010. Positive results from this study should allow the companies to go ahead with the New Drug Application (NDA) filing for the candidate in mid-2011.
We currently have a Neutral recommendation on Forest Labs, which is supported by a Zacks #3 Rank (short-term Hold rating). We are pleased with the favorable results on linaclotide and believe that this drug has the potential to effectively treat patients suffering from abdominal pain and bowel symptoms.
However, we remain concerned about the strength of the company’s pipeline relative to the loss in sales that will come with the Lexapro (2012) and Namenda (2015) patent expirations. With Lexapro losing patent protection in March 2012, roughly half of the company’s top line will be 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. Namenda will face generic competition in early 2015 — this puts another $1+ billion at risk.
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