Description
Forest Laboratories, Inc. 10% Owner CARL C ICAHN bought 1,962,011 shares on 8-21-2012 at $ 34.18
BUSINESS OVERVIEW
General
Forest Laboratories, Inc. and its subsidiaries (“the Company” or “Forest”) develop, manufacture and sell branded forms of ethical drug products most of which require a physician's prescription. Our most important products in the United States are marketed directly, or “detailed,” to physicians by our salesforces. We emphasize detailing to physicians those branded ethical drugs which we believe have the most benefit to patients and potential for growth. We also focus on the development and introduction of new products, including products developed in collaboration with licensing partners.
Our products include those developed by us, including in conjunction with our partners, as well as those acquired from other pharmaceutical companies and integrated into our marketing and distribution systems.
We are a Delaware corporation organized in 1956, our principal executive offices are located at 909 Third Avenue, New York, New York 10022 (telephone number 212-421-7850 ) and our corporate website address is http://www.frx.com. We make all electronic filings with the Securities and Exchange Commission (SEC), including Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those Reports available on our corporate website free of charge as soon as practicable after filing with or furnishing to the SEC.
Cautionary Statement Regarding Forward-Looking Statements
Except for the historical information contained herein, this report contains forward looking statements that involve a number of risks and uncertainties, including the difficulty of predicting U.S. Food and Drug Administration (FDA) approvals, acceptance and demand for new pharmaceutical products, the impact of competitive products and pricing, challenges to our intellectual property, the impact of legislative and regulatory developments on the manufacture and marketing of pharmaceutical products and the uncertainty and timing of the development and launch of new pharmaceutical products. This report contains forward-looking statements that are based on Management’s current expectations, estimates, and projections. Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “forecasts,” variations of these words and similar expressions are intended to identify these forward-looking statements. Certain factors, including but not limited to those identified under “Item 1A. Risk Factors ” of this report, may cause actual results to differ materially from current expectations, estimates, projections, forecasts and past results. No assurance can be made that any expectation, estimate or projection contained in a forward-looking statement will be achieved or will not be affected by the factors cited above or other future events. Forest undertakes no obligation to release publicly any revisions to forward-looking statements as the result of subsequent events or developments. We disclaim any obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
Developments
The following is a summary of selected key developments during the fiscal year ended March 31, 2012, that affected or will affect our business, including developments regarding our marketed products and products in various stages of development.
Aclidinium: In June 2011, we submitted a New Drug Application (NDA) to the FDA for aclidinium (aclidinium bromide), a novel long-acting antimuscarinic agent developed as an inhaled therapy for the maintenance treatment of chronic obstructive pulmonary disease (COPD). In March 2012, we received notification from the FDA that a three-month extension is required to complete its review of the data supporting the NDA. No additional data was requested by the agency to complete the review. FDA action is now expected by July 2012. This notification follows the Pulmonary-Allergy Drugs Advisory Committee (PADAC) meeting in February 2012, during which the committee endorsed the efficacy and safety of twice-daily aclidinium bromide 400ug with a positive 12 to 2 vote in favor of approval.
The efficacy and safety of aclidinium was studied in a clinical trial program including 2,717 COPD patients in 9 studies. In these trials, aclidinium demonstrated significant improvement in lung function, with a low incidence of side effects, compared to placebo.
When given by inhalation, aclidinium leads to bronchodilation by inhibiting airway smooth muscle contraction. Aclidinium is rapidly hydrolyzed in human plasma to two major inactive metabolites. Aclidinium is administered to patients using a novel state-of-the-art multi-dose dry powder inhaler (MDPI). This inhaler was designed with a feedback system which, through a ‘colored control window’ and an audible click, helps confirm that the patient has inhaled correctly. It contains multiple doses of aclidinium, includes a visible dose-level indicator, and also incorporates safety features such as an anti-double dosing mechanism and an end-of-dose lock-out system to prevent use of an empty inhaler.
We licensed the exclusive U.S. marketing rights to aclidinium from Almirall, S.A. (Almirall), a pharmaceutical company headquartered in Barcelona, Spain. We will be responsible for sales and marketing of aclidinium in the U.S. and Almirall has retained an option to co-promote the product in the U.S. in the future, while retaining commercialization rights for the rest of the world. Under the terms of the agreement, we will be obligated pay Almirall $40 million upon FDA approval and Almirall will receive royalty payments based on aclidinium sales.
Aclidinium is covered by a U.S. composition of matter patent that expires in 2020 subject to possible patent term extension. As a new chemical entity not previously approved by the FDA, aclidinium will qualify for five years of marketing exclusivity under the Drug Price Competition and Patent Term Restoration Act of 1984, commonly known as the Hatch-Waxman Act.
Pursuant to our agreement, Almirall has also granted us certain rights of first negotiation for other Almirall respiratory products involving combinations with aclidinium. Pursuant to such rights, we commenced the development of a fixed-dose combination of aclidinium and the long acting beta-agonist formoterol for the treatment of COPD. In January 2011, we reported positive top-line results from two Phase II(b) dose-ranging studies comparing different fixed-dose combinations of aclidinium and formoterol to aclidinium alone, formoterol alone and placebo administered BID (twice daily) in patients with moderate to severe COPD. Both studies showed statistically significant differences for the fixed-dose combination on the primary endpoint versus placebo. The fixed-dose combinations also provided a numerically higher bronchodilation effect compared to aclidinium alone and formoterol alone. Phase III studies with the fixed-dose combination commenced in September 2011 and we anticipate top-line results from the trials during the first half of calendar 2013.
Under the terms of the agreement, we will be obligated to pay Almirall future milestone payments if development and commercialization are successfully completed for this second product.
COPD is an under-diagnosed, progressive, irreversible lung disease and is the third leading cause of death in the U.S. The World Health Organization (WHO) has described COPD as a global epidemic; an estimated 64 million people have COPD worldwide. More than 3 million people died of this condition in 2005, which is equal to 5 percent of all deaths globally that year. Total deaths from COPD are projected to increase by more than 30 percent in the next 10 years without interventions to cut risks, particularly exposure to tobacco smoke.
Linaclotide: In August 2011, we and our partner Ironwood Pharmaceuticals, Inc. (Ironwood) submitted to the FDA an NDA for linaclotide, for the treatment of constipation-predominant irritable bowel syndrome (IBS-C) and chronic constipation (CC). The submission was based on efficacy and safety data from a Phase III clinical program comprising four double-blind, placebo-controlled trials and two open-label long term safety studies. A total of more than 2,800 patients received a once-daily dose of either linaclotide or placebo across the four placebo-controlled clinical trials: two trials in patients with IBS-C and two trials in patients with CC. Data from these trials showed that statistically significant improvements in abdominal and bowel symptoms were achieved for linaclotide-treated patients. Additionally, over 3,200 patients have enrolled in ongoing open-label safety trials and more than 2,000 of those patients have received linaclotide for at least 12 months. In April 2012, the FDA notified us that it will require a three-month extension to complete its review of the data supporting the NDA for both indications. An additional analysis of existing data was requested by the FDA to further characterize the relative effect of the two doses of linaclotide that were studied in the Phase III CC clinical trials. Since this analysis was submitted to the FDA within three months of the user fee goal date, the date has been extended by three months, in accordance with applicable regulation. No new data was requested by the agency to complete the review. FDA action is now expected by September 2012.
Linaclotide is an agonist of the guanylate cyclase type-C receptor found in the intestine and acts by a mechanism distinct from previously developed products for IBS-C and CC. Linaclotide is administered orally but acts locally in the intestine with no measurable systemic exposure at therapeutic doses and is intended for once-daily administration.
Upon NDA acceptance by the FDA, we made a $20 million milestone payment to Ironwood and will be obligated to pay Ironwood an additional $85 million upon FDA approval. Under the terms of the agreement, we and Ironwood jointly and equally fund development and we will also jointly and equally fund commercialization of linaclotide in the United States, sharing profits and losses equally. Additionally, we have exclusive rights in Canada and Mexico and will pay Ironwood royalties on net sales in these countries. In addition to five years of Hatch-Waxman exclusivity that would be granted upon approval, linaclotide is covered by a U.S. composition of matter patent that expires in 2025, subject to possible patent term extension.
IBS-C is a chronic functional gastrointestinal disorder characterized by abdominal pain, abdominal discomfort, and bloating associated with altered bowel habits and as many as 11 million people in the U.S. suffer from it. IBS-C can have an impact on daily living. There are currently few available therapies to treat this disorder.
As many as 34 million Americans suffer from symptoms associated with CC and 8.5 million patients have sought treatment. Patients with CC often experience hard and lumpy stools, straining during defecation, a sensation of incomplete evacuation, and fewer than three bowel movements per week, as well as abdominal discomfort and bloating. There is a high rate of dissatisfaction with currently available treatments for CC.
Viibryd®: As a result of our acquisition of Clinical Data, Inc. (Clinical Data) completed in April 2011, we obtained exclusive worldwide rights to develop and market Viibryd (vilazodone HCl) a selective serotonin reuptake inhibitor and a 5-HT 1A receptor partial agonist developed by Clinical Data for the treatment of adults with major depressive disorder (MDD). Viibryd became available to patients during the June 2011 quarter and was formally launched in the U.S. in late August 2011. Sales of Viibryd totaled $56.5 million in fiscal 2012.
Viibryd was approved by the FDA in January 2011. The efficacy of Viibryd was established in two 8-week, multi-center, randomized, double-blind, placebo-controlled studies in adult (18-80 years of age) outpatients who met the Diagnostic and Statistical Manual of Mental Disorders, Fourth Edition, Text Revision (DSM-IV-TR) criteria for MDD.
The exclusive worldwide rights to develop and market Viibryd are licensed from Merck KGaA (Merck). In addition to five years of Hatch-Waxman exclusivity that expires in 2016, Viibryd is covered by a U.S. composition of matter patent that expires in 2014 (a patent term extension application has been filed to extend this patent until 2019). Pediatric exclusivity and other patents may provide additional exclusivity.
MDD is a serious medical condition requiring treatment, which affects more than 15 million adults in the United States annually or approximately 6.5% of the adult U.S. population. A person diagnosed with MDD exhibits a combination of symptoms that interfere with one’s ability to work, sleep, study, eat and enjoy once-pleasurable activities. Depression costs the U.S. an estimated $44 billion each year. Among all medical illnesses, MDD is a leading cause of disability in the U.S. The WHO predicts depression will become the second leading cause of disability in 2012.
Daliresp®: In February 2011, we received approval from the FDA for the marketing of Daliresp (roflumilast). Daliresp is a novel first-in-class, once-daily, orally administered, selective phosphodiesterase-4 (PDE4) enzyme inhibitor, developed by our partner Nycomed GmbH (Nycomed) as a treatment to reduce the risk of COPD exacerbations in patients with severe COPD. Daliresp became available to patients during the June 2011 quarter and was formally launched in late August 2011. Daliresp recorded sales of $31.2 million in fiscal 2012.
While the specific mechanism by which Daliresp exerts its therapeutic action in COPD patients is not well defined, it is thought to be related to the effects of increased intracellular cyclic adenosine monophosphate (AMP) in lung cells. Daliresp is the first oral treatment for COPD patients to reduce the risk of exacerbations. Other treatments for COPD patients include the use of bronchodilators alone and in combination with inhaled corticosteroids.
We licensed the exclusive U.S. rights to Daliresp from Nycomed. Pursuant to our agreement with Nycomed we are obligated to pay Nycomed royalties on Daliresp sales. In addition to five years of Hatch-Waxman exclusivity that expires in 2016, Daliresp is covered by a U.S. composition of matter patent that expires in 2015 (a patent term extension application has been filed to extend this patent until 2020).
Namenda®: Namenda (memantine HCl), our moderate-affinity, uncompetitive N-methyl-D-aspartate (NMDA) receptor agonist for the treatment of moderate and severe Alzheimer’s disease achieved sales of $1.4 billion during our 2012 fiscal year and, according to data published by IMS, as of April 30, 2012, Namenda achieved a 35.7% share of total prescriptions in the Alzheimer’s market.
In June 2010, Namenda XR™ was approved by the FDA for the treatment of moderate to severe dementia of the Alzheimer’s type. Namenda XR is a 28mg once-daily, extended-release formulation of Namenda. We plan to launch the product in the second half of calendar 2013, to assure the continued success of the franchise.
We licensed the exclusive rights to develop and market memantine in the United States from Merz GmbH & Co. (Merz) of Germany, the originator of the product. Namenda and Namenda XR are covered by a U.S. method of use patent that expires in April 2015. Under settlement agreements with generic manufacturers who challenged our patent, several companies have licenses to launch generic versions of Namenda three months before this patent expires, or earlier in certain circumstances. In addition to three years of Hatch-Waxman exclusivity that expires in June 2013, and the patent described above, Namenda XR is covered by a U.S. method of use patent that relates to the memantine formulation that expires in 2029.
Bystolic®: Bystolic (nebivolol), our beta-1 selective beta-blocker with vasodilating properties, achieved sales of $347.8 million in fiscal 2012 and according to data published by IMS, as of April 30, 2012, Bystolic’s market share was 4.0% of total prescriptions in the beta-blocker category. Like other beta-blockers, Bystolic decreases heart rate and myocardial contractility.
We recently initiated a Phase III clinical trial to study a fixed-dose combination of Bystolic and the market’s leading angiotensin II receptor blocker (ARB) valsartan for the treatment of patients with hypertension. In January 2012, we began a multicenter, randomized, double-blind, placebo-controlled study of approximately 3,750 patients to evaluate the safety and efficacy of Bystolic and valsartan in patients with stage 1 or 2 essential hypertension. We expect to report preliminary top-line data from the study around the middle of calendar 2013.
We licensed exclusive United States and Canadian rights to Bystolic from Mylan Inc. (Mylan). Mylan licensed the U.S. and Canadian rights to Bystolic from Janssen Pharmaceutica N.V. (Janssen) and obtained Janssen’s consent to sub-license Bystolic to us in those territories. In February 2008, we amended our license agreement with Mylan to terminate Mylan’s further commercial rights for Bystolic in the United States and Canada and to reduce future payment obligations to Mylan. Pursuant to the amendment, we made a one-time cash payment of $370 million to Mylan and were obligated to pay Mylan its original contractual royalties for a period of three years, which ended in calendar 2010, at which time our royalty rate was substantially reduced. In March 2012, we entered into an agreement with Janssen, under which we acquired all U.S. patents and other U.S. and Canadian intellectual property for Bystolic, thereby eliminating all future royalties. Under the terms of the agreement, we made a one-time cash payment of $357 million to Janssen, and Janssen assigned to us all U.S. patents and other U.S. and Canadian know-how covering Bystolic. In addition to five years of Hatch-Waxman exclusivity that expires in December 2012, Bystolic is covered by a U.S. pharmaceutical composition of matter patent (the ‘040 patent) that expires in December 2021.
In February 2012, we and Janssen received notification from several companies that they had filed Abbreviated New Drug Applications (ANDAs) with Paragraph IV certifications seeking approval to market generic versions of Bystolic before the expiration of the ‘040 patent. We and Janssen jointly filed lawsuits in the U.S. District Court for the District of Delaware and in the U.S. District Court for the Northern District of Illinois against these companies for infringement of the ‘040 patent.
CEO BACKGROUND
Howard Solomon
Director since 1964
Mr. Solomon, age 82, is the Chairman of the Board and has served as our Chief Executive Officer since 1977. We believe that Mr. Solomon’s experience as a senior executive in our industry, his in-depth knowledge of our Company and its day-to-day operations, and his strong strategic vision for the Company qualify him to serve on our Board.
Lawrence S. Olanoff, M.D., Ph.D.
Director since 2006
Dr. Olanoff, age 58, has been President and Chief Operating Officer of the Company since October 2006. From July 2005 to October 2006, Dr. Olanoff served as President and Chief Executive Officer at Celsion Corporation where he was also a director from July 2005 to July 2006. For the ten years prior to July 2005, Dr. Olanoff served as Executive Vice President – Chief Science Officer at Forest. Dr. Olanoff’s detailed knowledge of the pharmaceutical industry, his service as a senior executive and his extensive experience with and participation in research and development combine to qualify him to serve as a director of Forest.
Nesli Basgoz, M.D.
Director since 2006
Dr. Basgoz, age 52, is the Associate Chief for Clinical Affairs, Division of Infectious Diseases, Massachusetts General Hospital (MGH) and serves as Associate Professor of Medicine at Harvard Medical School. Dr. Basgoz previously served as Clinical Director, Infectious Diseases Division of MGH. Dr. Basgoz’s extensive experience with clinical trials provides her with the skills and experience necessary to effectively advise the Board and management with respect to the clinical trial process. Moreover, her expertise in infectious diseases allows Dr. Basgoz to advise the Board and management with respect to the Company’s current and potential portfolio drugs within the relevant indications.
William J. Candee, III
Director since 1959
Mr. Candee, age 83, is the Co-Chairman of the Board of Directors and a principal of TXX Services, LLC, a transportation company with operations in New York, New Jersey and Connecticut. For more than five years prior to June 2004, Mr. Candee was of counsel to the law firm of Rivkin Radler, LLP. Mr. Candee has served on numerous boards of directors and has also acted as liaison between affiliated boards of directors. His career-long experience with matters of business and law has assisted the Board’s consideration of management issues and strategic initiatives, many of which involve complex legal and financial arrangements.
George S. Cohan
Director since 1977
Mr. Cohan, age 86, has been President of the George Cohan Company, Inc., a consultancy, since June 1989. During the span of his career, Mr. Cohan has held management positions at various marketing, advertising and communications companies and this professional experience, coupled with his in-depth knowledge of the Company, allow him to add valuable perspectives to the discussions of our Board and to offer advice and insight to management, particularly with respect to Forest’s marketing and communications efforts.
Dan L. Goldwasser
Director since 1977
Mr. Goldwasser, age 70, is a practicing attorney and has been a shareholder at the law firm Vedder Price, P.C. since May 1992. Mr. Goldwasser has previously been chairman of the American Bar Association’s Business Law Section’s Committee on Law and Accounting and co-chairman of the American Bar Association’s National Conference of Lawyers and Certified Public Accountants, and was a member of the Auditing Standards Board of the American Institute of Certified Public Accountants. Mr. Goldwasser’s expertise in legal and accounting matters and his more than 30 years of service as a director qualify him for service on the Board.
Kenneth E. Goodman
Director since 1998
Mr. Goodman, age 62, is the former President and Chief Operating Officer of Forest (December 1998 to September 2006). For eighteen years prior thereto, Mr. Goodman served as Forest’s Vice President – Finance and Chief Financial Officer and in addition served as Executive Vice President – Operations since February 1998, during which time he helped to oversee a significant expansion of the scope of the operations of the Company. From 1975 to 1980, he served as a senior financial officer at Wyeth (now part of Pfizer Incorporated). Mr. Goodman’s intimate knowledge of Forest’s operations and his substantial expertise in financial matters make him a valuable member of the Board and provide an important interface between management and the Board.
Lester B. Salans, M.D.
Director since 1998
Dr. Salans, age 74, is a Clinical Professor and member of the Clinical Attending Staff – Internal Medicine at the Mount Sinai Medical School. Prior thereto, Dr. Salans served as the Vice President of Academic and Scientific Affairs and Vice President of Preclinical Research at Sandoz Pharmaceutical Corporation. Dr. Salans is a former Director of the National Institutes of Health and the National Institute of Arthritis, Diabetes, Digestive and Kidney Diseases and is a frequent lecturer on diabetes. Dr. Salans’ medical expertise in the fields of diabetes mellitus, obesity and endocrinology allows him to advise the Board and management generally on matters relating to research and development and more specifically with respect to the Company’s current and potential portfolio drugs within such indications.
Peter J. Zimetbaum, M.D.
Director since 2009
Dr. Zimetbaum, age 46, served as Director of Clinical Electrophysiology at Beth Israel Deaconess Medical Center in Boston (BIDMC) from 2001 to 2005. Since 2005, he has served as Director of Clinical Cardiology at BIDMC. Additionally, since 2006, Dr. Zimetbaum has been an Associate Professor of Medicine at the Harvard Medical School. Dr. Zimetbaum received his M.D. degree from Albert Einstein College of Medicine in 1990 and is board certified in both Cardiovascular Medicine and Cardiovascular Electrophysiology. Dr. Zimetbaum’s extensive experience in the practice of medicine and clinical trials allows him to advise the Board and management with respect to the perspectives of physicians and other healthcare providers who use the Company’s products as well as the clinical trial process. Moreover, Dr. Zimetbaum’s expertise in cardiology is a valuable resource to the Board and management in analyzing current and potential portfolio drugs within the relevant indications.
MANAGEMENT DISCUSSION FOR LATEST QUARTER
General
Total net revenues decreased to $821.1 million for the three months ended June 30, 2012 as compared to $1.15 billion for the same period last year primarily due to a decrease in Lexapro® sales resulting from the expiration of its market exclusivity in March, partially offset by increases in sales of our currently promoted products. Our next generation products, Bystolic®, Savella®, Teflaro®, Daliresp® and Viibryd®, totaled $200 million in sales for the current quarter, representing growth of 63% over the year ago period. Lexapro’s market exclusivity expired in March 2012 and Lexapro now faces generic competition which, as expected, has resulted in a significant reduction in sales as compared with the same period last year. Net income decreased 78.6% in the current quarter as compared to the same period last year primarily due to the expiration of Lexapro’s market exclusivity as well as the impact in the current quarter of post-launch promotional spending for Daliresp and Viibryd and pre-approval commercial costs associated with aclidinium (Tudorza ™ Pressair ™) and linaclotide.
On July 23, 2012 we along with our licensing partner Almirall, S.A. (Almirall), received marketing approval from the U.S. Food and Drug Administration (FDA) for Tudorza Pressair (aclidinium bromide inhalation powder) for the long-term maintenance treatment of bronchospasm associated with chronic obstructive pulmonary disease (COPD), including chronic bronchitis and emphysema. We expect Tudorza Pressair to be available to wholesalers in the fourth quarter of calendar 2012.
In May 2012, we entered into an agreement with Nabriva Therapeutics (Nabriva) for the development of Nabriva’s novel antibacterial agent, BC-3781. Pursuant to the agreement, upon the expiration of the Hart-Scott waiting period in July 2012, we provided Nabriva an upfront fee of $25 million and will fund and conduct, in collaboration with Nabriva, certain development activities related to BC-3781 over the next 12 months. During the 12-month period we have the exclusive right to acquire Nabriva. Our decision to acquire Nabriva will be dependent upon certain contingencies.
Financial Condition and Liquidity
Net current assets increased by $52.6 million from March 31, 2012. Cash and cash equivalents and marketable securities and investments increased by $71.8 million primarily due to cash generated by operating activities of $90.5 million offset by capital expenditures of $18.5 million.
Of our total cash and cash equivalents and marketable securities position at June 30, 2012, 11%, or approximately $345 million, was domiciled domestically with the remainder held by our international subsidiaries. Approximately $2.9 billion is held in low tax jurisdictions and is attributable to earnings that are expected to be indefinitely reinvested offshore. Cash repatriations are subject to restrictions in certain jurisdictions and may be subject to withholding and other taxes. We continue to actively seek opportunities to further develop foreign operations through strategic alliances, business acquisitions, collaboration agreements, and other investing activities including working capital and capital expenditures. We expect cash generated by our U.S. operations, together with existing cash, cash equivalents, marketable securities, our $500 million revolving credit facility and access to capital markets to be sufficient to cover cash needs for our U.S. operations including common stock repurchases, strategic alliances and acquisitions, milestone payments, working capital and capital expenditures. We invest funds in variable rate demand notes that have major bank liquidity agreements, municipal bonds and notes, government agency bonds, commercial paper, corporate bonds, certificates of deposit, auction rate securities and floating rate notes.
Trade accounts receivable decreased $52.0 million primarily due to lower sales as a result of the expiration of Lexapro’s market exclusivity. Net inventories decreased $8.8 million as we continue to manage our inventory at levels appropriate to support our products’ current life cycles. In anticipation of the expiry of Lexapro’s market exclusivity, the Company designed and executed over the past few years, a plan to manage Lexapro inventory balances to levels necessary to support post-expiry sales levels. We believe that current inventory levels are adequate to support the growth of our ongoing business. Other current assets decreased primarily due to a reduction in our current tax asset account that resulted from accruing the current period tax expense against tax overpayments made in prior periods. Accounts payable and accrued expenses decreased primarily due to significant declines in royalties payable and accrued rebates related to Lexapro. The decline in accrued rebates was net of a $12 million change in estimate for obligations pursuant to the Healthcare Reform Bill.
Property, plant and equipment before accumulated depreciation increased from March 31, 2012 as we continue to invest in our technology and facilities.
On May 18, 2010, the Board of Directors authorized the 2010 Repurchase Program for up to 50 million shares of our common stock. The authorization was effective immediately and has no set expiration date. Since the beginning of fiscal 2011, we have entered into three separate agreements with Morgan Stanley & Co. LLC (MSCO) to repurchase a cumulative total of $1.35 billion of our common stock utilizing accelerated share repurchase transactions (ASRs): a $500 million ASR entered into in June 2010, a $500 million ASR entered into in June 2011 and a $350 million ASR entered into in August 2011. Pursuant to these transactions, we paid MSCO the applicable purchase price upon entering each ASR and as of June 30, 2012, MSCO delivered to us a total of 38.4 million shares: 16.9 million shares during fiscal 2011 (5.7 million shares purchased under the 2007 Repurchase Program and 11.2 million shares purchased under the 2010 Repurchase Program) and 21.5 million shares during fiscal 2012 (all under the 2010 Repurchase Program). In July 2012, the Company received an additional 1.7 million shares (for a total of 13.5 million shares at an average price $37.04) and 1.2 million shares (for a total of 10.9 million shares at an average price of $32.07) upon final settlement of the June 2011 ASR and August 2011 ASR, respectively. As of August 8, 2012 we had the authority to repurchase an additional 14.4 million shares under the 2010 Repurchase Program.
Results of Operations
Net sales for the three-month period ended June 30, 2012 decreased $352.4 million or 31.9% as compared with the same period last year primarily due to a decrease in Lexapro sales of $475.7 million resulting from the expiration of its market exclusivity in March, partially offset by increases in our promoted products Namenda®, Bystolic, Teflaro, Viibryd and Daliresp.
Sales of Namenda (memantine HCl), a N-methyl-D-aspartate (NMDA) receptor antagonist for the treatment of moderate and severe Alzheimer's disease increased $48.5 million or 15.2% to $368.4 million for the quarter ended June 30, 2012 as compared with the June 30, 2011 quarter of which $55.1 million was due to price increases offset by volume decreases of $6.6 million. Namenda’s patent is set to expire in April 2015.
Bystolic (nebivolol), a beta-blocker indicated for the treatment of hypertension, grew 38.2%, achieving sales of $107.8 million in the current quarter, an increase of $29.8 million as compared to $78.0 million for the quarter ended June 30, 2011 of which $18.7 million was due to increased sales volume and $11.1 million was due to price increases.
Sales of Savella (milnacipran HCl), a selective serotonin and norepinephrine reuptake inhibitor (SNRI) for the management of fibromyalgia increased 3.5% to $26.7 million as compared to $25.8 million for the same period last year due to price increases totaling $3.2 million offset by volume decreases of $2.3 million.
Teflaro (ceftaroline fosamil), a broad-spectrum hospital-based injectable cephalosporin antibiotic for the treatment of adults with community-acquired bacterial pneumonia and with acute bacterial skin and skin structure infections, launched in March 2011, achieved sales of $9.4 million for the quarter ended June 30, 2012.
Viibryd and Daliresp, two of our newest products became available to patients during the June 2011 quarter and were formally launched in late August 2011.
Viibryd (vilazodone HCl), our selective serotonin reuptake inhibitor (SSRI) and a 5-HT 1A receptor partial agonist for the treatment of adults with major depressive disorder (MDD) recorded sales of $37.4 million for the quarter ended June 30, 2012.
Daliresp (roflumilast), our selective phosphodiesterase 4 (PDE4) enzyme inhibitor, achieved sales of $17.8 million for the current three-month period. Daliresp is indicated for the treatment to reduce the risk of exacerbations in patients with severe COPD associated with chronic bronchitis and a history of exacerbations.
Sales of Lexapro (escitalopram oxalate), an SSRI indicated for the initial and maintenance treatment of MDD in adults and adolescents and generalized anxiety disorder in adults, decreased 81.2% to $110.0 million for the quarter as compared with $585.7 million for the same period last year due to the loss of market exclusivity in March 2012. Lexapro now faces generic competition which has significantly eroded sales.
Contract revenue for the current quarter was $65.8 million compared to $40.6 million in the same period last year. Benicar® (olmesartan medoxomil) co-promotion income totaled $35.4 million, a decrease of $1.3 million compared to $36.7 million in last year’s first quarter. Contract revenue in the current quarter also included $29.4 million of income from a distribution agreement with Mylan, Inc. (Mylan) pursuant to which Mylan is authorized to sell a generic version of Lexapro and we retain a portion of the profits from those sales.
Cost of sales as a percentage of net sales was 22.4% for the June 2012 quarter, as compared with 23.0% in the same period last year. Cost of sales includes royalties in respect of our products. In the case of our principal products, Lexapro and Namenda, the royalties are in the range of 15 to 25% of sales.
Selling, general and administrative expense increased to $382.3 million for the current quarter as compared to $358.1 million for the same period last year. The current level of spending reflects the resources and activities we believe are required to support our currently marketed products, particularly our newest products Teflaro, Daliresp and Viibryd and pre-approval commercial costs associated with Tudorza Pressair and linaclotide.
Critical Accounting Policies
The following accounting policies are important in understanding our financial condition and results of operations and should be considered an integral part of the financial review.
Estimates and Assumptions
The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and of revenues and expenses during the reporting period. Estimates are made when accounting for sales allowances, returns, rebates and other pricing adjustments, depreciation, amortization, tax assets and liabilities, restructuring reserves and certain contingencies. Forest Laboratories, Inc. is subject to risks and uncertainties, which may include but are not limited to competition, federal or local legislation and regulations, litigation and overall changes in the healthcare environment that may cause actual results to vary from estimates. We review all significant estimates affecting the financial statements on a recurring basis and record the effects of any adjustments when necessary. Certain of these risks, uncertainties and assumptions are discussed further under the section entitled “Forward Looking Statements.”
Goodwill and Intangible Assets
Goodwill and intangible assets are evaluated for impairment periodically or when events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable through the estimated undiscounted future cash flows from the use of these assets. When any such impairment exists, a charge is recorded in the Statement of Income in that period, to adjust the carrying value of the related asset. Additionally, goodwill and indefinite-lived intangible assets are subject to an impairment test at least annually.
Revenue Recognition
Revenues are recorded in the period the merchandise is shipped. As is typical in the pharmaceutical industry, gross product sales are subject to a variety of deductions, primarily representing rebates and discounts to government agencies, wholesalers and managed care organizations. These deductions represent estimates of the related liabilities and, as such, judgment is required when estimating the impact of these sales deductions on gross sales for a reporting period. Historically, our adjustments for actual future settlements have not been material. If estimates are not representative of actual settlements, results could be materially affected. Provisions for estimated sales allowances, returns, rebates and other pricing adjustments are accrued at the time revenues are recognized as a direct reduction of such revenue.
The accruals are estimated based on available information, including third party data, regarding the portion of sales on which rebates and discounts can be earned, adjusted as appropriate for specific known events and the prevailing contractual discount rate. Provisions are reflected either as a direct reduction to accounts receivable or, to the extent that they are due to entities other than customers, as accrued expenses. Adjustments to estimates are recorded when customer credits are issued or payments are made to third parties.
The sensitivity of estimates can vary by program and type of customer. However, estimates associated with Medicaid and contract rebates are most at risk for adjustment because of the extensive time delay between the recording of the accrual and its ultimate settlement, an interval that can range up to one year. Because of this time lag, in any given quarter, adjustments to actual may incorporate revisions of prior periods.
Provisions for Medicaid and contract rebates during a period are recorded based upon the actual historical experience ratio of rebates paid and actual prescriptions written. The experience ratio is applied to the period’s sales to determine the rebate accrual and related expense. This experience ratio is evaluated regularly to ensure that the historical trends are as current as practicable. As appropriate, we will adjust the ratio to more closely match the current experience or expected future experience. In assessing this ratio, we consider current contract terms, such as the effect of changes in formulary status, discount rate and utilization trends. Periodically, the accrual is adjusted based upon actual payments made for rebates. If the ratio is not indicative of future experience, results could be affected. Rebate accruals for Medicaid were $46.9 million at June 30, 2012 and $70.3 million at March 31, 2012. Commercial discounts and other rebate accruals were $159.5 million at June 30, 2012 and $147.2 million at March 31, 2012. Accruals for chargebacks, discounts and returns were $50.7 million and $53.0 million at June 30, 2012 and March 31, 2012, respectively. These and other rebate accruals are established in the period the related revenue was recognized, resulting in a reduction to sales and the establishment of a liability, which is included in accrued expenses.
Forward Looking Statements
Except for the historical information contained herein, the Management Discussion and other portions of this Form 10-Q contain forward looking statements that involve a number of risks and uncertainties, including the difficulty of predicting FDA approvals, acceptance and demand for new pharmaceutical products, the impact of competitive products and pricing, the timely development and launch of new products, changes in laws and regulations affecting the healthcare industry and the risk factors listed from time to time in our filings with the SEC, including the Annual Report on Form 10-K for the fiscal year ended March 31, 2012. We assume no obligation to update forward-looking statements contained in this Form 10-Q to reflect new information or future events or developments.
CONF CALL
Frank J. Murdolo - Vice President of Investor Relations
Thank you, Sylvia, and good morning, everyone. Thank you for joining us today for this first quarter fiscal 2013 conference call. Joining me today is Frank Perier, our Executive Vice President of Finance and Administration and Chief Financial Officer; Elaine Hochberg, our Executive Vice President, Sales and Marketing and Chief Commercial Officer; and Marco Taglietti, our Senior Vice President, Research and Development and President of the Forest Research Institute.
By now, each of you should have seen the earnings release that we issued this morning. The release is also available at our website, www.frx.com. By way of Safe Harbor statement, let me add that various remarks that we may make about future expectations, plans and prospects for the company constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, and actual results may vary. These remarks involve a number of risks and uncertainties, including the difficulty of predicting FDA approvals, the acceptance and demand for new pharmaceutical products, the impact of competitive products and pricing, the timely development and launch of new products and the risk factors listed from time to time in Forest Laboratories' annual report and quarterly reports.
Let me now turn the call over to Frank, who will comment on the business during the quarter.
Francis I. Perier - Chief Financial Officer, Executive Vice President of Finance & Administration and Member of Disclosure, Legal Compliance & Risk Management Committee
Thank you, Frank, and good morning, everyone. We began fiscal '13 with the successful completion of our Phase III clinical development program for levomilnacipran. Preparation of the NDA is now underway with plans to submit the filing to the FDA during the third calendar quarter of 2012.
Early last month, we entered into an agreement with Nabriva Therapeutics for the development of Nabriva's novel antibacterial agent, BC-3781. Forest has the exclusive right to acquire Nabriva. Forest's decision to acquire Nabriva will be dependent upon certain contingencies.
A few weeks ago, we hosted an investor day meeting to review our late-stage R&D development pipeline and commercialization strategy. Since Marco and his team and Elaine and Bill Meury just provided a very comprehensive review at the meeting, we are going to abbreviate most of our usual background comments during the morning's conference call. So overall, a productive and exciting start for the new fiscal year.
I'll turn it over to Elaine, who will now review our sales performance for the quarter.
Elaine Hochberg - Chief Commercial Officer, Executive Vice President of Marketing and Member of Disclosure, Legal Compliance & Risk Management Committee
Thank you, Frank, and good morning, everyone. I was pleased to have the opportunity to speak before you at our investor day meeting on June 20, and it truly is my pleasure to update you this morning on how our commercial portfolio of new and existing products are performing.
Let's start with our newest launches, Daliresp and Viibryd. Daliresp continues to gain momentum in both pulmonology and primary care. Sales for the quarter were $17.8 million, a 35.9% increase over the March 2012 quarter. We continue to be pleased with the prescription data and trends for Daliresp. As of the week ended July 6, there are nearly 230,000 prescriptions written. Overall, total prescription volume in the June quarter increased over 30% versus the March quarter. New prescription share of the total market was 1.68% for the week ended July 6 versus 1.49% for the last week of March.
Over 24,000 physicians have already prescribed Daliresp, and 67% of the physicians that have prescribed have done it more than once. Likelihood to prescribe remains high for both PCPs and for pulmonologists. The support and advocacy, as you know, of pulmonologists is a key need in this category, and continued signs of adoption by this group are very encouraging, with new prescription share among specialists exceeding national [indiscernible] and reaching almost 3%. We are meeting with pulmonologists in the hospital setting, as well as in their practice offices. Through our hospital initiative, we've added 2,000 new pulmonologists to our existing panel of 6,000 pulmonologists. Market share in pulmonology is up almost 50 basis points in the June quarter versus the market -- the March quarter.
Our leading cohort of Daliresp prescribers has more than tripled the market share of the national average. The next cohort, which comprises almost half of all current Daliresp prescribers, has doubled the market share versus national. Both of the cohorts continue to grow, and these are very good trends for Daliresp and good harbingers for future growth.
Turning to Viibryd with sales for the quarter of $37.4 million, a 50.2% increase over the March 2012 quarter. We expect Viibryd's strong growth to be sustained by broad-based audience appeal and first-line use in patients with moderate to severe MDD.
Total prescriptions in the June quarter grew over 25% versus the March quarter. As discussed at our investor day meeting, physicians continue to describe the effect of the drug observed in the clinical trials as meaningful, consistent across multiple depression rating scales and similar to other SSRIs, with a tolerability profile that is favorable. And we continue to hear very positive experiences from doctors and patients.
As of the week ended July 6, approximately 700,000 prescriptions were written by over 55,000 prescribers. Approximately 75% of prescribers are repeat writers. The leading cohort of Viibryd prescribers has an average of 2.5% market share, which is practically 5x the national average and bodes well for continued growth.
In year 2 following product launches, we will continue to promote growth by further educating and informing PCPs about the product Viibryd for such appropriate channels as detailing speakers bureaus, lunch and learns and sampling. It's an opportune time in this product's young life cycle, because PCPs will have time to gain exposure to the product and feedback from their specialist colleagues. Our efforts ultimately aim to give primary care physicians more experience with Viibryd, either to convince them to prescribe for the first time or to expand their use of the product.
Bystolic had a very good quarter and exceeded the $100 million mark for the first time. Sales in the quarter for Bystolic were $107.8 million, representing growth of 38.2% year-over-year. Bystolic has achieved a 4.6% share among specialists. Weekly national share among all prescribers is now consistently above 4% and, recently, almost 15 basis points higher, which demonstrates the product's continued momentum. There are currently 250,000 prescribers of Bystolic, and nearly 99% of using physicians are repeat prescribers.
Overall, Bystolic has performed very well. As we discussed at our investor day meeting, looking forward, we intend to continue to spur Bystolic's growth with the release of additional data to instruct appropriate use of the product, as well as the development and, hopefully, the approval and launch of a fixed dose combination of Bystolic and the market-leading ARB, valsartan. Through a fixed dose combination product, we hope to expand the pool of eligible patients of Bystolic and to generate first-line use as well.
Teflaro has launched into hospitals over a year ago. In that time, the recognition of the quality of our sales efforts and of Teflaro have advanced. Teflaro is showing good uptake in skin, and we await the next respiratory season to continue the share growth that we saw at the end of the last respiratory season intact. Sales of Teflaro in the quarter were $9.4 million, up 19% over the fourth fiscal quarter and significantly up compared to the $2.7 million in the year-ago quarter. Since the product's launch in 2011, Teflaro has generated approximately 348,000 days of therapy, which is an increase of 17% over quarter 4.
Teflaro has a strong user base, with over 3,000 using hospitals purchasing the product. The number of new and repeat accounts is also climbing, with more hospitals purchasing Teflaro each week. Quarter-over-quarter, we've seen an increase of approximately 12% in total accounts purchasing Teflaro. 75% of target hospitals have purchased Teflaro to date. Over 80% of hospitals have purchased Teflaro multiple times. 60% have done so greater than 10x. 50% of target hospitals have Teflaro on formularies, and 54% of those have unrestricted formularies. In total, this is a picture of increasing strength.
Namenda is an important product for Forest. Sales for Namenda were $368.4 million in the quarter with growth of 15.2% year-on-year. We expect Namenda to continue to be a growth product. Furthermore, the launch of an XR product that has a higher dose, a once-a-day formulation and also has a study in combination with oral acetylcholinesterase inhibitors should propel future growth for this important product.
Savella. Savella's sales in the quarter were $26.7 million, growth of 3.5% year-over-year compared to sales of $25.8 million last year. Overall, as we've discussed before, the fibromyalgia market has grown more modestly than anticipated and has proven itself to be a more specialty-driven market than a broad-based PCP category. Savella's share among specialists is still comparable to that of Cymbalta and Lyrica.
Lexapro's patent exclusivity ended this past March. Substitution rates for Lexapro are effectively at 90%. Sales of Lexapro were $110 million in the quarter.
So this concludes our recap of the quarter and the performance of our promoted products. Of course, as we described at our investor day meeting, we are now busily preparing for the potential launches of 2 additional primary care products: aclidinium, our LAMA for the treatment of COPD; and linaclotide, our GCC agonist for the treatment of IBS-C and chronic constipation, 2 common GI conditions treated by primary care physicians and gastroenterologists. We anticipate approval of aclidinium shortly and linaclotide later this summer and are planning to introduce both products to the market either late in the third quarter or early in the fourth calendar quarter.
Now let me turn the call over to Frank Perier for an update on the financial results.
Francis I. Perier - Chief Financial Officer, Executive Vice President of Finance & Administration and Member of Disclosure, Legal Compliance & Risk Management Committee
Thank you, Elaine. Let's move on to review the financial results for the quarter. We have just completed our first fiscal quarter following the loss of patent exclusivity for Lexapro, and as expected and reported, our earnings for the quarter reflect the impact.
Reported earnings per share are $0.21 for the first quarter of fiscal 2013 compared to earnings per share in the first quarter of fiscal 2012 of $0.90, which included a charge of $0.14 per share, net of tax, related to the new product license agreement for azimilide, a novel antiarrhythmic agent.
Non-GAAP earnings per share in the first quarter of fiscal '13 equaled $0.28 as compared to $1.07 for the first quarter in fiscal 2012, excluding acquisition-related amortization in both periods presented and azimilide in last year's first quarter.
Total revenues for the fiscal first quarter, which are inclusive of product sales, pretax earnings from Benicar and the Lexapro-authorized generic, interest and other income totaled approximately $821.1 million versus $1.2 billion last fiscal year.
Fiscal first quarter revenues were comprised of approximately $751.8 million of product sales versus $1.1 billion last year, $65.8 million of contract revenue, which included $35.4 million from the Benicar agreement and $29.4 million of Lexapro authorized generic income. Interest and other income totaled $3.5 million.
Turning to wholesale or inventories, we see them really at normal levels, just under 3 weeks and in line with the last quarter.
Moving down to gross margin in the quarter, which came in at 77.6%, this compares with 77% in last year's fiscal first quarter. SG&A spending during the quarter was $382.3 million, up 6.8% from $358.1 million in last year's first quarter. The current level of spending reflects the resources and activities that we believe are required to support our currently marketed products, particularly in our newest products, Teflaro, Daliresp and Viibryd.
Research and development spending for the current quarter was $195.2 million compared to $194.4 million reported in the first quarter last year. As I stated, the prior quarter included the upfront license charge of $40 million for azimilide. Excluding that payment, R&D expense increased 26.4%.
Research and development spending is primarily in support of an expanded late-stage development program spread out over multiple product pipeline projects. There were no development milestone payments in either period.
The company's reported effective tax rate for the quarter was 26.7% compared to a reported rate of 25.3% in the prior year. We expect the annual effective rate to be approximately 23% for fiscal 2013.
Turning to shares outstanding, in May of 2010, the board approved a share repurchase program of up to 50 million shares of the company's common stock. There were no shares repurchased during the current quarter. We have 17.3 million shares remaining under our 2010 share repurchase authorization. Actual shares outstanding as of June 30 were approximately 368,596,000, a decrease of approximately 5.9 million shares from last year.
Our cash and marketable securities balance as of June 30 was approximately $3.2 billion, an increase of $72 million from last quarter. Of the $3.2 billion total, approximately $345 million or 11% of our cash and marketable securities is domiciled domestically, with the remainder maintained by our international subsidiaries.
With regard to our use of cash, we have judiciously managed our cash resources to facilitate growth of the business and return its capital to the shareholders. Since 2004, we have repurchased $4.7 billion worth of stock, including the 3 ASR programs. In addition, since 2007, we have invested $2.8 billion in business development, including the acquisitions of Cerexa, Novexel, the Grünenthal European colistin business and clinical data for a cumulative total of $2.1 billion and invested in an additional $700 million in initial new product license agreements.
Now let me turn the call over to Marco for a quick pipeline update.
Marco Taglietti - Senior Vice President of Research & Development, Member of Disclosure, Legal Compliance & Risk Management Committee and President of Forest Research Institute (FRI)
Thank you, Frank. Good morning, everyone. So as I mentioned at our investor day meeting last month, creating sustainable growth beyond 2012 has been the motto and the mission of my R&D organization for the last few years because we were well aware that the Lexapro cliff was coming. And in R&D, we have been preparing for it by building systematically, methodically and relentlessly a broad and deep pipeline and the right R&D organization to deliver it.
Having completed a lot of hard work in the last couple of years, we now enter fiscal year 2013 off to a great start. As Frank just mentioned, we expect to receive notice very soon from FDA about the approval of aclidinium. And we are looking forward to the upcoming PDUFA date for linaclotide. In addition, we plan to file 2 NDAs by the end of this calendar year: one for levomilnacipran and one for cariprazine. So by the end of the year, we should have 2 products approved and 2 new NDAs filed. As I said, a great start.
We also continue to move forward with our regulatory filings for Canada, where we received the acceptance letter for our filing for Bystolic a few months ago. Let's start with an update of our respiratory pipeline. As I mentioned, we expect to receive approval for aclidinium by the FDA very shortly. With regard to the fixed dose combination of aclidinium and formoterol, the Phase III studies with a fixed dose combination began in September 2011, and we anticipate the first top line results from the trials to report out during the first half of calendar 2013 and to complete the registration program in the second half of 2013.
Also, in respiratory, we continue to support the launch of Daliresp, and we are conducting additional post-marketing studies to meet FDA's post-approval requirements and, very importantly, to further characterize the profile of Daliresp in the approved indication.
Moving now to linaclotide, we and our partner, Ironwood Pharmaceuticals, submitted the linaclotide NDA in August of last year for the treatment of IBS-C and chronic constipation. In April, the FDA extended the review period for linaclotide to this coming September. We currently don't see any obstacle to the path for successful registration by the revised PDUFA date.
Moving on to our CNS pipeline. On March 7, we and our partner, Pierre Fabre, announced the successful completion of the levomilnacipran Phase III program, a once-daily selective serotonin and norepinephrine reuptake inhibitor for the treatment of MDD, major depression disorder. And on April 26, we reported an additional positive result study for a -- from a Phase III levomilnacipran MDD. So with 3 successfully completed, positive Phase III studies for the treatment of MDD in adults, we are on track to file a new drug application for levomilnacipran during this quarter.
Moving to cariprazine. We and our partner, Gedeon Richter, were pleased to announce in February the successful completion of the Phase III program for cariprazine for both schizophrenia and acute mania. We remain on track to file the NDA for cariprazine for both indications during the fourth quarter of calendar year 2012.
Cariprazine is also under development in Phase II studies for bipolar depression and as an adjunct treatment in MDD. We expect to report the top line results from these studies around the end of calendar 2013 and mid-2014, respectively.
Let's turn to our anti-infectives pipeline. As Frank mentioned earlier, on June 1, we announced an agreement with Nabriva Therapeutics for the development of their novel antibacterial agent, BC-3781. BC-3781 belongs to a novel class of antibiotics, the pleuromutilins. It exhibits microbiological activity against a wide range of gram-positive pathogens, including MRSA and penicillin-resistant streptococcus pneumoniae, as well as certain gram-negative organisms often implicated in respiratory infections. Based on its profile, BC-3781 may have utility in the treatment of both acute bacterial skin and skin structure infection and community-acquired bacterial pneumonia, among other conditions. It would complement our existing hospital antibiotic franchise because, in addition to the intravenous formulation, another formulation will also be developed, providing an opportunity to treat patients after they are discharged from a hospital.
In 2011, Nabriva announced positive results from a Phase IIb study in 207 patients with acute bacterial skin infections, and we expect to advance BC-3781 into pivotal Phase III studies in 2013. With Teflaro approved and launched, our focus now is moving to the combination with avibactam, formerly known as NXL 104. Avibactam is a new broad-spectrum beta-lactamase inhibitor that we are developing in combination with ceftaroline and with ceftazidime. Development of ceftazidime Avibactam is a joint collaboration between Forest and AstraZeneca. Clinical studies are ongoing in complicated intra-abdominal infection and complicated urinary tract infections.
Also, as you may know, on June 22, our partner, AstraZeneca, received a positive CHMP opinion for ceftaroline. Ceftaroline will be marketed by AstraZeneca in Europe under the brand name Zinforo.
With regard to our cardiovascular pipeline, we were excited to report to you last quarter that, as part of our life cycle strategy for Bystolic, we have initiated a Phase III clinical trial to study a fixed dose combination of Bystolic and valsartan for the treatment of patients with hypertension. A multicenter, randomized, double-blind, placebo-controlled study of approximately 3,700 patients to evaluate the safety and efficacy of Bystolic and valsartan in patients with stage 1 or 2 essential hypertension began in January. We expect to report preliminary top line data from the study around the middle of calendar year 2013.
This is all with regard to our development pipeline. Frank, I'm now turning the call back to you.
Francis I. Perier - Chief Financial Officer, Executive Vice President of Finance & Administration and Member of Disclosure, Legal Compliance & Risk Management Committee
Thank you, Marco. Before turning back to the business, let me just update you on one matter. Once again, Carl Icahn, a shareholder who owns just under 10% of Forest's shares, has moved to nominate 4 individuals to the Forest board. Forest board has proposed a slate of all 10 of its current directors. The annual meeting is scheduled for Wednesday, August 15, 2012.
So just to recap overall on the business, we are off to a strong start for the year. We have 5 new drugs that we are actively marketing: Bystolic, Savella, Teflaro, Daliresp and Viibryd, collectively demonstrating strong growth and marketplace acceptance. We expect to hear from the FDA soon regarding the approval status of aclidinium and later this summer on the approval status for linaclotide. Assuming approval for both products, we will have 2 new product launches in this fiscal year.
We are on track to file levomilnacipran in the coming months and cariprazine in the fourth quarter of this year. Assuming their respective regulatory approvals in calendar 2013, we expect to launch levomilnacipran and cariprazine in calendar 2014, which would bring us 9 new products -- 9 new product launches since the beginning of 2008.
This portfolio of products represents 6 therapeutic categories: central nervous system drugs, cardiovascular, anti-infective, respiratory, gastrointestinal and pain. We have deliberately and strategically diversified our product portfolio so as not to be dependent on any single product or therapeutic area.
Today, we have one of the strongest and most diverse pipelines in pharma, with multiple branded products in 6 large therapeutic categories. These areas are 6 of the most common disease states that primary care physicians treat. Having a broad portfolio of products to promote to primary care physicians will drive meaningful commercial synergies as we generate significant operating leverage from cross-selling multiple products to PCPs.
For example, we already call on approximately 80% of the physicians to whom we expect to promote linaclotide when approved. Through its broad access to and understanding of these physicians, we can generate higher product sales and more profitable products. Our track record of new product development compares favorably to our specialty pharma peers, as well as many of the industry's largest companies. For example, we have had more new molecular entity approvals and new drug applications/BLA findings over the last 3 years in similarly sized companies and have had the same number or more than much larger companies like GSK, AZ, Merck and Eli Lilly.
We now boast one of the strongest and most diverse product portfolios and pipelines in the industry, in large part due to our strong core competency in our key therapeutic focus areas and our status as a partner of choice, as evidenced by our numerous repeat collaborations.
We have a long track record of successful product selection, product development and sales and marketing execution, and the investments we are making to support our products are both prudent and necessary to help them reach their full commercial potential.
There are, of course, substantial upfront expenses associated with successfully developing and launching new products. However, we have managed our expenses carefully and have kept our costs at appropriate levels when taking into account the many new products we have in development and in the early stage launch phase. This gives us great optimism about our future prospects, and we believe that we will once again deliver substantial progress in the coming year.
Frank J. Murdolo - Vice President of Investor Relations
Thank you, Frank. I will now read the first quarter sales figures for some of our smaller products. Starting with Campral, $4.6 million; Celexa, $3.7 million; Cervidil, $13.3 million; Esgic, $0.5 million; Europe, $32.4 million; Generics, $6.8 million; Lorcet, $0.8 million; Monurol, $0.9 million; Thyroid, $10.4 million; Tiazac, $0.7 million; and then just lastly, the Benicar third-party sales for the reporting period were $251.4 million.
And operator, I think we are ready to start the Q&A session if you would, please.
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Fund Letters
