Forest Laboratories is splashing out a minimum of $480 million to acquire privately-held Cerexa and get access to its new antibiotics. In particular, Forest will obtain worldwide development and marketing rights, excluding Japan, to two injectable antibiotics and an option for a third which is currently in early stage trials.
The jewel in Cerexa’s crown is ceftaroline, a next-generation, broad-spectrum, hospital-based cephalosporin antibiotic that exhibits bactericidal activity against the most resistant strains of Gram-positive bacteria, including methicillin resistant Staphylococcus aureus otherwise known as MRSA.
A Phase III trial in patients with complicated skin and skin structure infections should begin in the first quarter of 2007 and a second Phase III study, in community-acquired pneumonia, is scheduled to start in the subsequent quarter.
In March this year, the US Food and Drug Administration granted ceftaroline fast-track status for the treatment of cSSSI caused by MRSA and Forest said that, if approved, hopefully in 2010 or 2011, it will be able to use its existing hospital-based salesforce. Cerexa’s second product is ME1036, a broad-spectrum intravenous carbapenem antibiotic which is currently in preclinical development.
Financial impact for Forest
As for the financial impact of the deal on Forest, the company said that it expects to incur a one-time after-tax charge of approximately $0.96 per share, as nearly all of the purchase price will be expensed as in-process R&D. In addition, Forest will make a one-time payment of $100 million if US sales of ceftaroline during any 12-month period within the first five years following launch exceed $500 million.
That payment would appear to be a distinct possibility as Forest chief executive Howard Solomon said that his firm has “a high degree of confidence in the successful commercialisation and financial prospects for ceftaroline given the strength of the existing clinical data and the clinical need for a next-generation hospital-based antibiotic.”
He also acknowledged that Forest needs to boost its pipeline, saying that “we are, of course, also aware of the need to replace earnings from key marketed products following their patent expirations in the next decade and will continue to review additional in-licensing and co-promotion opportunities as well as other strategic acquisitions.”
Forest’s flagship product is the antidepressant Lexapro (escitalopram), which has patent protection until 2012, despite a recent patent challenge by Teva, and had sales of $2 billion for the last fiscal year.
However, the firm suffered a clinical setback in October, when it received, along with partner Replidyne, a non-approvable letter from the FDA for faropenem medoxomil, an antibiotic for acute bacterial sinusitis, community-acquired pneumonia, chronic bronchitis and adult skin infections.
Analysts believe ceftaroline will be more successful and investors did not seem too annoyed by the amount being paid for Cerexa as Forest’s share price slipped only ever so slightly after the deal was announced.