Forest Laboratories (NYSE:FRX) has been something of a darling in investment circles lately.
Its antidepressants, Celexa and Lexapro, drove strong sales in the third quarter. More recently, the big story is its new treatment for Alzheimer's disease, Namenda. The drug joins others in the small Alzheimer's category, which includes Pfizer's (NYSE:PFE) Aricept, Novartis' (NYSE:NVS) Exelon, and Shire Pharmaceuticals and Johnson & Johnson's (NYSE:JNJ) Reminyl. Unlike competitors, all of which are recommended for mild-to-moderate Alzheimer's, Namenda has an important edge: It is the only therapy approved for moderate-to-severe cases.
Namenda's monopoly in the Alzheimer's niche has not been lost on investors. The stock is up 77% from its 52-week low, and some analysts are buzzing that Forest will beat expectations when it reports its fourth-quarter results in a couple of weeks, thanks in part to strong uptake of Namenda.
A recent article in The New York Times, however, may give investors some pause. The piece, which covered a late March meeting of doctors and health professionals at Johns Hopkins University, suggests that at least some physicians are skeptical of the benefits provided by currently available Alzheimer's therapies, including Namenda.
Of course, Namenda and other treatments have some utility, otherwise they wouldn't have been approved for sale by the Food and Drug Administration (FDA). However, the article raised the question of whether, in light of what one physician called their "very limited efficacy," the drugs are worth their cost. Underlining this uncertainty, one professional group, the American Academy of Neurology, reportedly has even failed to recommend the treatments, and instead urged doctors to merely consider them.
Fortunately for Forest Labs, it has a powerful weapon at its disposal, namely, its marketing. The company hired an additional 525 salespeople to detail Namenda, and expects to spend about $280 million to $290 million overall on the drug's launch.
With this sort of marketing blitz, investors can probably rest easy that Forest Labs can overcome hesitancy on the part of physicians. After all, Namenda, while certainly not a cure, is the only treatment option advanced Alzheimer's sufferers have.
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Fool contributor Brian Gorman is a freelance writer living in Chicago, Ill. He does not own shares of any companies mentioned here.
