Forest Laboratories (NYSE:FRX) gave investors what seemed like a one-two punch of good news on Tuesday. First, it reported higher third-quarter profits, greatly linked to sales of its antidepressants Celexa and Lexapro. Later in the day, it said The Journal of the American Medical Association backed up the effectiveness of Namenda (memantine), its high-profile Alzheimer's treatment that was approved last October.

Forest said that third-quarter earnings leapt 30%, largely hinged on hyperactive sales of Celexa and Lexapro. It may be a far cry from its earnings warning way back in July due to a slowdown in prescriptions for those drugs, but during its conference call (courtesy of CCBN StreetEvents), the company explained that, along with market share gains, there was another reason for the upsurge: inventory building by wholesalers and distributors ahead of the December holiday season. (Judging by the usual holiday doldrums matched with a heightened terror alert, stockpiling probably seemed logical.)

The company explained that the buildup probably represented $15 million to $25 million of the antidepressant sales, and expects smaller orders for the first several weeks of the March quarter to make up for it.

The company rallied around its initiatives to push Lexapro ahead of Celexa (which will soon face generic competition), in a blitz that seems to be working -- in the quarter, Lexapro supplanted Celexa as the company's largest product, with sales of $314 million compared to $274 million. Price hikes on Celexa make it clear that it's no longer the company's favorite.

However, if investors really want something to be happy about, the story seems to be Namenda. According to the Alzheimer's Association, by 2010, more than 5.5 million Americans will have the disease.

Other medications to treat Alzheimer's include Pfizer's (NYSE:PFE) Aricept, Novartis' (NYSE:NVS) Exelon, and Shire Pharmaceuticals (NASDAQ:SHPGY) and Johnson & Johnson's (NYSE:JNJ) Reminyl. However, Namenda had already distinguished itself by treating a niche of patients other drugs did not -- moderate-to-severe Alzheimer's patients.

In the call, company officials mentioned the possibility that, given some positive study results in mild-to-moderate Alzheimer's (and, of course, hinging on later FDA approval in that area), Namenda might one day be the first drug to treat the full spectrum of Alzheimer's patients.

Namenda is being rolled out as we speak, with the company officials explaining a sampling program that is currently in place. So, while the surging antidepressant revenues may not be sustainable, good times certainly could be ahead if Namenda lives up to the high hopes.

Talk about the possibilities for this drug and others on The Motley Fool's Pharmaceuticals discussion board.

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