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GEN News Highlights : Dec 14, 2006

Forest Buys Antibiotics Firm in Deal Worth $494M

Company will pay an additional $100 million dependent on sales of lead product.

Forest Laboratories bought Cerexa for $480 million. The company has thus gained access to Cerexa’s injectable antibiotics, a field that has a U.S. market worth of between $5 billion and $7 billion, reports Forest. Worldwide the market is estimated to be over $9 billion.

As part of the deal, Forest will acquire worldwide development and marketing rights, excluding Japan, to two injectable antibiotics and an option for a third injectable antibiotic currently in early-stage trials. The lead compound, ceftaroline acetate, which is entering Phase III studies, is being developed for treatment of skin infections and community acquired pneumonia. Forest expects to launch the product in 2010 or 2011.

"Ceftaroline is an important late-stage development product that can address serious and life-threatening infections in the hospital setting, including MRSA," comments Howard Solomon, chairman and CEO. “We have a high degree of confidence in the successful commercialization and financial prospects for ceftaroline given the strength of the existing clinical data and the clinical need for a next-generation, hospital-based antibiotic.”

The second antibiotic, now in preclinical trials, is being developed to treat bacteria, including staph infections.

The acquisition is valued at approximately $494 million, which includes related transaction costs and fees. Forest will also make a future one-time payment of $100 million if U.S sales of ceftaroline during any twelve-month period within the first five years after product launch exceeds $500 million.

Forest expects to close the deal in fiscal fourth quarter. The company opened trading 2% down from its Wednesday close of $51.30.