Forest Lab s' (NYSE:FRX) efforts to restock its pipeline took another step forward on Thursday morning, when the company announced a licensing agreement with Mylan Labs (NYSE:MYL) -- a company known more for generics and an ill-fated attempt to purchase King Pharmaceuticals (NYSE:KG).

Under the agreement announced Thursday, Forest acquires the rights to market nebivolol in the United States and Canada in exchange for a $75 million up-front payment, certain milestone payments, and a royalty on sales. The drug, which Mylan originally licensed from a unit of Johnson & Johnson (NYSE:JNJ), has received an approval letter from the Food and Drug Administration (with the approval pending the satisfactory completion of some outstanding issues) for use in hypertension, and it will likely also be cleared for the treatment of congestive heart failure (CHF) in 2006.

For Mylan, this is a solid deal. The company had known for some time that it wouldn't be able to launch the drug itself, and that was part of the rationale for the King Pharmaceuticals purchase -- to acquire an experienced sales infrastructure that could handle the drug. Now, though, the company gets a fair chunk of cash flow up front and virtually risk-free royalties with no additional costs on their part.

While many people think of Forest as a neurological-drug specialist, it does already have the drug Benicar for treating hypertension. Though not a blockbuster, it does at least represent a foot in the door with respect to the cardiovascular drug market.

It's tough for me to gauge what the immediate prospects for the drug are. Although it does have a different mechanism of action and could thus offer some unique benefits, the hypertension market is huge and highly competitive. So the risk here is that nebivolol becomes just a "me too" drug. On the other hand, that CHF indication could be the real key. Clinical trial results have been encouraging, and there is definitely a need for better medications for this very serious disease.

As Forest has recovered quite nicely from its lows, it's not nearly such an easy pick. That's not to say there isn't more room for it to run, but I do believe that Fools who bought in the low $30s have already pocketed the "panic profits" that were left on the table when Wall Streeters fled in terror.

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Fool contributor Stephen Simpson owns shares of Johnson & Johnson but has no financial interest in any other stocks mentioned (that means he's neither long nor short the shares). The Motley Fool has a disclosure policy.