Forest Laboratories has posted a major decline in fiscal third-quarter net income and flat sales, but the US drugmaker is confident that its pipeline is in good shape.

Net income was $188.0 million, or $0.62 per share, representing a decline of 37.7%. However, the firm noted that the fall was primarily due to a charges of $150 million related to licensing deals Forest has recently signed – with Phenomix Corp for the a proprietary dipeptidyl-peptidase-4 inhibitor dutogliptin for the treatment of diabetes (which is in Phase III) and Pierre Fabre for the antidepressant F2695, an isomer of milnacipran. The latter will go into late-stage trials shortly.

Revenues were flat at $998 million, and sales of Forest’s flagship product Lexapro (escitalopram), the antidepressant licensed from Denmark’s Lundbeck. contributed $585.8 million, a 3.0% decrease year-on-year. Sales of Namenda (memantine), Forest’s N-methyl-D-aspartate (NMDA) receptor antagonist for the treatment of moderate and severe Alzheimer's disease, reached $240.9 million during the quarter, up 10.1%.

Forest’s recently-launched antihypertensive Bystolic (nebivolol) brought in just under $21 million, while other income reached $77.9 million (including contract revenue of $47.3 million from the co-promotion of Daiichi Sankyo’s angiotensin receptor blocker Benicar (olmesartan), a decline of 8.6%.

Chief executive Howard Solomon said that the latest quarter has started well, with the news last week that Savella (milnacipran), a selective serotonin and norepinephrine dual reuptake inhibitor, has been approved by the US Food and Drug Administration for the management of fibromyalgia. Savella got the green light without any issues being raised by the FDA as did Bystolic in December 2007 and Mr Solomon noted that it is “a record for Forest to have two new products approved virtually within a year of each other, and both on first-pass reviews”.

He added that the firm expects to report trial results for “several late-stage products already in Phase III during the calendar year as well as the entry of other products into Phase III trials this year and next year”. Forest is also looking to license-in additional compounds “in order to replace and exceed sales and earnings from currently marketed products that will decline following expiration of their marketing exclusivity three and four years from now." Lexapro will go off-patent in 2012.

Forest concluded by saying that it expects fiscal year earnings in the range of $3.35- $3.45 per share, excluding items, up from a previous estimate of $3.30-$3.40.