FDA sets up roadblock for Forest, Richter, rejecting schizophrenia drug

The FDA set up a potentially serious roadblock for Forest Laboratories ($FRX) and its partner Gedeon Richter, rejecting their application for the schizophrenia/bipolar drug cariprazine and likely delaying any possible approval until the agency gets additional clinical trial data.

The move into regulatory limbo is a clear setback for Forest Laboratories, which has billed this new therapy as one of its top late-stage prospects as it pushed a full slate of studies for schizophrenia and bipolar disease. Analysts' estimates on peak sales have varied widely, with numbers ranging from $200 million to a blockbuster-sized market. And in the past Richter executives--who struck a deal with Forest dating back to 2005--have estimated top annual sales at up to $2 billion.

More information, including clinical trial data, would probably be required to satisfy regulators, the companies noted in their joint statement today. Typically, that's a signal that regulators will require a new clinical study--a lengthy and expensive process.

"Given the complex pharmacokinetics and metabolism of cariprazine, we believe this request was made to better define the optimal dosing regimen to maintain the demonstrated efficacy, while minimizing the potential for the development of adverse events generally associated with this class of drug," said Dr. Marco Taglietti, president of the Forest Research Institute.

But in an unusual move, spokespeople for both companies scrambled this morning to assert that the delay could be very brief, with no new study requirements. And Richter claims that it sees nothing that could derail the launch.

"There's no sign currently that the request would threaten the market launch," Richter spokesman Zsuzsa Beke told The Wall Street Journal. "There were no concerns raised during the review process that would have led us to believe that there were any open issues." 

Seamus Fernandez at Leerink Swann, though, put his finger in the wind and came up with a radically different conclusion.

"Given the FDA's complete response letter, we believe a two-year delay is realistic," he noted this morning. "Assuming we delay cariprazine by two years and reduce our F2022 sales forecast from $400M to $200M," the setback could carve $2 out of his stock price projection for Forest. And that could trigger cost cutting moves as well as new M&A deals.

- here's the story from the Wall Street Journal