Forest Laboratories Management Discusses Q2 2014 Results - Earnings Call Transcript

| About: Forest Laboratories, (FRX)

Forest Laboratories (NYSE:FRX)

Q2 2014 Earnings Call

October 22, 2013 10:00 am ET

Executives

Frank J. Murdolo - Vice President of Investor Relations

Brenton L. Saunders - Chief Executive Officer, President, Director, Chairman of Compensation Committee and Member of Compliance Committee

Elaine Hochberg - Chief Commercial Officer, Executive Vice President of Marketing and Member of Disclosure, Legal Compliance & Risk Management Committee

Francis I. Perier - Chief Financial Officer, Executive Vice President of Finance & Administration and Member of Disclosure, Legal Compliance & Risk Management Committee

Marco Taglietti - Senior Vice President of Research & Development, Member of Disclosure, Legal Compliance & Risk Management Committee and President of Forest Research Institute (NYSEARCA:FRI)

Analysts

Jami Rubin - Goldman Sachs Group Inc., Research Division

Liav Abraham - Citigroup Inc, Research Division

Gregory B. Gilbert - BofA Merrill Lynch, Research Division

Vamil Divan - Crédit Suisse AG, Research Division

Timothy Chiang - CRT Capital Group LLC, Research Division

Seamus Fernandez - Leerink Swann LLC, Research Division

John T. Boris - SunTrust Robinson Humphrey, Inc., Research Division

Aaron Gal - Sanford C. Bernstein & Co., LLC., Research Division

David G. Buck - The Buckingham Research Group Incorporated

David W. Maris - BMO Capital Markets U.S.

Christopher T. Schott - JP Morgan Chase & Co, Research Division

Operator

Welcome to the Forest Laboratories Second Quarter 2014 Earnings Conference Call. [Operator Instructions] I would now like to turn the call over to Frank Murdolo, Vice President of Investor Relations.

Frank J. Murdolo

Thank you, Leo, and good morning, everyone. Thank you for joining us today for this second quarter fiscal 2014 conference call. Joining me today is Brent Saunders, our Chief Executive Officer and President; Elaine Hochberg, our Executive Vice President, Sales and Marketing, and Chief Commercial Officer; Frank Perier, our Executive Vice President of Finance and Administration, and Chief Financial Officer; and Marco Taglietti, our Senior Vice President of Research and Development and President of the Forest Research Institute.

By now, each of you should have seen the earnings release that we issued this morning. The release is also available at our website, www.frx.com. By way of Safe Harbor statement, let me add that various remarks that we may make about future expectations, plans and prospects for the company constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, and actual results may vary. These remarks involve a number of risks and uncertainties, including but not limited to, the difficulty of predicting FDA approvals, the acceptance and demand for new pharmaceutical products, the impact of competitive products and pricing, the timely development and launch of new products and the risk factors listed from time to time in Forest Laboratories' annual report and quarterly reports.

Let me now turn the call over to Brent.

Brenton L. Saunders

Thank you, Frank. Good morning, everyone. It's a pleasure to speak with you for the first time since I joined Forest just 3 weeks ago. I'm proud to have the opportunity to lead this company, and I feel privileged to succeed Howard Solomon as Forest's next CEO.

This is a great time to join the Forest team. A rejuvenation is beginning at Forest, as we return to growth, and with it, an appetite for meaningful change. We have a motivated and talented workforce, we are launching new products, we are developing new drugs to drive future growth, and we have a strong balance sheet.

At the same time, we are investing so much time, focus and energy in the Next Nine products. We are finding ways to reduce our spending to deliver a more leveraged P&L, 17% revenue growth and more than doubling non-GAAP EPS growth in the second quarter. Frank will talk more about the second quarter financials and our more optimistic full year outlook in a moment.

With our stable of fresh and patent-protected products, we have more room to drive significant sales growth. And with it, margin expansion in the medium to long term. Over the past 3 weeks, I've been conducting an extensive review of our business operations. I've spent a lot of time with Forest colleagues in New York, New Jersey, Long Island and Cerexa in California. I've reviewed the key pipeline assets and our business development initiatives. I spent the better part of last week in the field, visiting customers with our sales representatives. My goal is to gain a frontline view of the company operation and begin to think more about strategic decisions and the changes that we will make. It has also allowed me to assess the strength of our people, as we evaluate next steps to drive sustainable growth.

Based on my experience in this industry, I believe there are 4 dimensions of a truly great company: innovation, excellence in execution, talented people and sustained shareholder return. Regarding innovation. Forest has been successful with this approach of licensing and developing new and innovative drugs to address patient need. And our recent track record of 7 regulatory approvals since 2009 speaks for itself. Now that they are approved, flawlessly executing these launches and finding new channels to reach our target customer is our biggest short-term priority. Based on my early travels, I can tell you that the Forest team is strong, talented and committed. Our people are our greatest strength.

While this company has created a lot of shareholder value over its history, in recent years, we have not created a strong return for our shareholders. I can assure you that this has not only my attention and our Board of Directors' attention, but also has our leaders' and colleagues' attention. We are very focused on improving our performance in this very important dimension.

I know that many of you are wondering what my priorities are. What is the strategy, and what is going to change? After 3 weeks, it is a little early for me to provide specific details. But let me start by saying there will be changes. Our colleagues tell me that they expect change and are looking forward to it, although there is always trepidation about change. And those changes will make Forest stronger and more relevant to our key stakeholders, customers, shareowners, colleagues and partners.

Let me talk about our top priorities and give you a sense of when you'll hear more about next steps. As I said earlier, our top priority in the near term is maximizing the brand performance, including achieving further uptake of Linzess by expanding the prescriber base and taking share from competing products, including OTCs; fueling the shift from Namenda to Namenda XR; there's a lot of value to our stakeholders in moving to XR, especially patients and caregivers; engaging in hand-to-hand combat to gain share in the respiratory COPD market; maximizing the Bystolic opportunity; and launching FETZIMA well in December.

Our second priority is to deliver on some very important near-term pipeline opportunities, including cariprazine, which is expected late this year and our combination program. Our third priority is to develop plans to reduce our cost structure in a manner that does not detract from the launches and the near-term pipeline priorities. Finally, I see a real opportunity to focus on capital allocation and using our balance sheet to drive growth and create value for shareholders.

In terms of timing. After 3 weeks, I've made good progress in getting up to speed on the business and understanding the situation. As a result, I feel confident that by January, we will be ready to talk about our course for the future and our program for long-term sustainable growth and value creation. We will also be looking for some quick wins too.

One thing is crystal clear to me. Successful companies make choices and successful companies execute exceptionally well. When Forest was at its peak, we were focused, and we did a few things exceptionally well. We were exceptional at business development, clinical development and commercial execution. Those are our roots. And given our model, we need to do those things well on a continual basis to fuel sustainable growth. By that same token, that means that we need to choose the things that we will not do as a way of becoming more efficient with the dollars we invest in our business.

Let me give an example. As a result of the Next Nine strategy, we have covered a big chunk of the Lexapro revenue hole, and we have growth drivers for the future. At the same time, the complexity of our business has increased exponentially, in development, in regulatory, in manufacturing, in marketing and every part of our company. Our people have done an excellent job managing that complexity. Now we need to help them focus on key priorities by making the choices about where we are and where we are not going in the future.

In the days and weeks ahead, I will be focused on further developing our rejuvenation plan, and I will come back to you by January with specific strategic actions that we will take part -- that we will take as part of this plan, so stay tuned.

In summary, I'm excited to be here at Forest, and we are formulating plans to drive sustainable long-term performance. I look forward to the opportunity to meet with you in the near future.

Now let me hand the call over to Elaine to talk about the commercial performance in the second quarter.

Elaine Hochberg

Thank you, Brent, and good morning, everyone. As an overview, the second quarter was strong in terms of sales levels and growth rate. Namenda XR, our recent product launch, is off to a very strong start and currently running ahead of expectation. And sales and prescription levels for our 2 newest products, Linzess and Tudorza, continue to increase at a nice clip. Also preparations for the launch of levomilnacipran, our SNRI for depression, are on schedule, and we look forward to the introduction of that product.

So let's start with Namenda XR and Namenda. Sales for Namenda XR, our high-dose, once-a-day formulation of Namenda, were $11.5 million in the quarter. This compares with initial trade stocking sales of $14 million for the June quarter. Sales of the immediate release formulation of Namenda for the quarter were $396.3 million, approximately an 8% increase over the comparable prior year quarter. Namenda XR, as I said, is off to a strong start in both retail and long-term care. As of the end of September, the overall conversion rate is 17% of new prescriptions, and we are on track to meet and even exceed our launch goal.

Looking forward, we have entered into an agreement with Adamas Pharmaceuticals for the development and commercialization of a fixed-dose combination of Namenda XR and donepezil, which we are currently planning to launch during calendar year 2015. Over 70% of Namenda patients already take Namenda together with an acetylcholinesterase inhibitor like donepezil, which creates a substantial market opportunity for this fixed-dose combination product.

To complete our review of the CNS product line, I'll turn to our antidepressant Viibryd and the launch of FETZIMA. Sales for Viibryd in the second quarter were $47.4 million, an 18.9% increase over the $39.9 million for the same quarter last year. After a slower growth period during our first quarter amidst the launches of both Linzess and Tudorza, Viibryd is showing consistent gains in both demand and share and is well positioned for the remainder of fiscal '14 and beyond. Prescription volume in the second quarter increased by 26% versus the prior year.

FETZIMA, our SNRI for depression, was approved in September of 2013 and was launched to health plans across the United States just 2 weeks ago. Full field force promotions will commence in December. The efficacy and safety of FETZIMA at 3 different doses was established in 3 separate Phase III trials. FETZIMA and Viibryd have the same indication, but they differ pharmacologically and clinically. And we expect that they will be used for different reasons and in different patient populations.

Viibryd is an SSRI 5HT1A agonist. And FETZIMA is an SNRI. Viibryd was studied in a moderate population of patients. FETZIMA was studied in a moderate to severe population, many of whom suffered from recurrent depressive episodes. Both products have a high benefit-risk ratio. Our strategy is to segment the market so that the 2 products can coexist. Ultimately, we expect to reach a higher sales level with both products on the market than we could do with just one alone.

Viibryd and FETZIMA will be promoted together as a product line. And there are several benefits to that. The first is our overall selling proposition or value proposition to physicians. It will be stronger and more efficient when we can promote multiple products for the same condition. We can provide physicians with a more complete view of pharmacotherapy for depression than other companies can. Those 2 products can be used separately in different populations based on severity or in a sequence to address the highly variable response to antidepressant therapy.

And the second benefit of a deep product line is that the flagship product can pave the way or accelerate adoption of the following product. In this case, Viibryd paves the way for FETZIMA. In other words, we already have well-developed relationships with psychiatrists and primary care physicians who diagnose and treat depression.

Finally, as an outgrowth of our product line strategy, we're able to realize promotional efficiencies not necessarily available to other companies. The return on our promotional investment is simply higher by promoting 2 or more products for the same condition, to the same audience as opposed to just one. And for physicians, they benefit from multiple options associated with the product line offering.

So let's turn to our gastrointestinal franchise, which currently consists of Linzess, which was launched last December, 1 product for 2 indications. Linzess recorded sales of $34.4 million for the quarter. This compares with sales of $28.8 million for the June quarter. In terms of performance, Linzess TRx volume is well above launch aligned volume of Amitiza and tracking at approximately 100% of Zelnorm. Total prescriptions were up 43% versus the prior quarter.

Regarding OTC conversion. Over 65% of new patients starts for Linzess were derived from the OTC market. Our focus is on continuing to draw from this important source of growth. And so we will continue to expand our patient awareness program over the next several months, using pharmacies, the Internet, public relations and other media forms, including DTC advertising to reach patients suffering from IBS-C and CIC. We're adding almost 1,000 new writers each week, and we estimate that we will have close to 65,000 or more writers by the end of the year.

Feedback from MDs about Linzess is positive. The effect of linaclotide on constipation and pain is consistent with the trials. And in terms of tolerability, there have been no surprises. Diarrhea is the most common side effect with the drug, but like our clinical trials, is not leading to discontinuation.

Linzess is a very important product with a strong patent and long exclusivity period, and we are working with our partner, Ironwood, on several different development programs that could expand the use of Linzess into new conditions or populations through new FDA-approved indications. More information about our life cycle plan will be shared on future calls.

Our respiratory franchise, as you know, consists of 3 products, 2 currently in the market, Daliresp and Tudorza, and aclidinium/formoterol. Tudorza sales were $16.7 million for the quarter. This compares with sales of $15.9 million for the June quarter. Total prescriptions were up 24% versus prior quarter and are projected to increase at a steady rate in the second half of the year, particularly within Part D Medicare plans, following the addition of Tudorza to several key plans that became effective on July 1.

Share has more than doubled in Caremark SilverScript since the July Tier 2 win. And volume in Humana Part D has increased 50% since gaining access in June. This growth is especially notable in a quarter that is outside of the COPD season and is encouraging as we enter the late fall and winter months. To date, 27,236 physicians have prescribed Tudorza, and we continue to expand our user base with approximately 500 new writers every week.

Our focus right now is to continue on driving pull-through and on continuing to expand formulary coverage. In other words, increasing market share in plans where Tudorza is covered and securing coverage where it is not. Our sales force and account teams are completely focused on those objectives, and we continue to offer the Tudorza instant savings program, which provides co-pay assistance to patients and health plans where we have not yet obtained formulary coverage.

An additional growth driver in the quarters ahead is the expansion of our user base, which we expect to almost double over the next 12 months. Importantly, physician feedback about Tudorza remains positive. Physicians report that the drug and the device are performing in clinical practice like they did in the clinical trial. The next several months are very important to Tudorza, and we believe we've taken the necessary steps to create a trend break. Our promotional levels are at or above those of other companies, and we intend to keep it that way. Formulary coverage has improved. The user base is growing and physician perceptions for Tudorza are positive.

Turning to Daliresp. Sales of that product for the quarter were $24.5 million, a 25.4% increase over the $19.5 million for the same quarter last year. Prescription demand for the quarter was up 34% versus prior year. This continues to be an important option for severe patients at risk for exacerbation. And it rounds out our COPD sales goal and leverages the sales force investment we're already making on Tudorza.

Turning to our cardiovascular franchise. That franchise consists of Bystolic and the fixed-dose combination of Bystolic and valsartan, which we plan to file in the first quarter of 2014. Sales in the quarter for Bystolic were $130 million, representing growth of 22.1% year-over-year. Total prescription volume in the second quarter was up 6% versus prior year. The current trends on Bystolic illustrate the high market satisfaction with this product and the strength and reliability of the sales team. We continue to estimate a double-digit growth for Bystolic. We are starting to lay the groundwork for the launch of the fixed-dose combination of Bystolic and valsartan, which we expect will expand the pool of eligible patients for Bystolic and generate even more first- and second-line use for Bystolic.

So let's wrap up with our anti-infective franchise. This franchise consists of Teflaro, which is currently on the market and the combination of ceftazidime/avibactam, which is currently in Phase III clinical studies for complicated, intra-abdominal infections and complicated urinary tract infection. Our product line covers both Gram-positive and negative pathogens and multiple infection types treated in both the general ward and ICU.

Sales of Teflaro in the quarter were $14.9 million, an increase of 48.9% over last year's second quarter sales of $10 million. Days of therapy for the second quarter were up 44% versus prior year. Our strong user base of over 4,100 hospitals represent greater than 2/3 of the hospital universe. In July, the FDA approved a change in the stability profile of Teflaro. Now, unreconstituted vials of Teflaro can be stored at room temperature, making it easier for both hospitals and patients to store Teflaro.

In September, BD Diagnostics released the ceftaroline [ph] Sensi-Disc Susceptibility Testing Disc to the general market, enabling hospital microbiology departments to test Teflaro susceptibility in their labs, thereby simplifying the treatment decision.

That wraps up the product review. So now let me turn the call over to Frank for an update on the financial results.

Francis I. Perier

Thank you, Elaine, and good morning, everyone. Reported GAAP earnings per share was $0.26 in the second quarter of fiscal 2014. That compares to $0.08 in the second quarter of fiscal 2013. Non-GAAP EPS in the quarter totaled $0.36 as compared with $0.15 in the second quarter for fiscal 2013.

Turning to guidance. Earnings for the second fiscal quarter reflected solid sales in Namenda franchise and lower spending for research and development expenses. We now expect that non-GAAP earnings per share for the full fiscal year will be in the range of $0.95 to $1.15. Our guidance for total product sales and total net revenue for the fiscal year remain unchanged in the range of $3.3 billion to $3.5 billion, respectively.

With regard to the quarterly phasing, we expect a breakeven non-GAAP EPS to be reported in the fiscal third quarter. Product sales will be sequentially lower, impacted by elevated discount rates, largely attributable to the Medicare Part D doughnut-hole coverage. SG&A expense is expected to be sequentially higher due mainly to the launch of FETZIMA and timing of other marketing expenses related to the launch of products. R&D is also expected to be sequentially higher due to the timing of milestone payments in the quarter, approximately $50 million.

Revenues in the fourth fiscal quarter will be sequentially higher, reflecting continued growth of our new product launches and lower discount rates on the product sales. SG&A expense and the cost of R&D are expected to be moderately lower than the third quarter.

Turning back to the fiscal second quarter, total revenues were $855.3 million versus $760.6 million last fiscal year. Product sales were $811.4 million versus $692 million last year. Contract revenue was $36 million and included $35 million from the Benicar agreement. Interest and other income totaled $7.8 million. Wholesale inventories decreased to just under half a week this quarter compared to last quarter with just over 2 weeks. The impact to sales is approximately $23 million.

Turning to gross margin. The gross margin in the current quarter was 79.8% versus 78.4% in the comparable period -- in the comparable prior year quarter. The increase was due to the change in product mix and more favorable margins on certain product. SG&A spending during the quarter was $408.6 million, up 9% from the $374.9 million in last year's second quarter. The current level of spending reflects the resources and activities that we believe are required to support our currently marketed products, particularly, our newest products, Tudorza, Linzess and Namenda XR, as well as our recent launches of Viibryd, Daliresp and Teflaro. We expect full year SG&A spending guidance of approximately $1.75 billion to remain unchanged. For the quarter, Ironwood's share of the net loss from our partnership was $18.7 million.

Turning to research and development. Spending for the current quarter was $191.4 million as compared to $202.8 million reported in the second quarter last year, a decrease of 5.7%. We have reduced our full year R&D spending guidance from $835 million to approximately $800 million for the full fiscal year. R&D spending is primarily in support of our late-stage development program, spread over multiple pipeline projects, as well as post-approval commitments on marketed product. The current quarter includes milestone payments of $10 million. There were no milestone payments in the prior year's quarter, and there have been no upfront licensing agreement payments in either period. Excluding the impact of the milestone payments in the current quarter, R&D expense decreased 10.6% in the quarter.

The company's reported effective tax rate for the quarter was 23.6% compared to a reported rate of 37.4% in the prior year. The effective tax rate for the full year is expected to be approximately 21.7%. Actual shares outstanding as of September 30 were approximately 268,967,459, an increase of approximately 3 million shares from last year's second quarter.

Our cash and marketable securities balance on September 30 was approximately $3.1 billion, an increase of $141.4 million from the quarter ended June 30, 2013. Of the $3.1 billion total, approximately $234.5 million or 7.6% of our cash and marketable securities is domiciled domestically with the remainder maintained by our international subsidiary.

Let me now turn the call over to Marco for a pipeline update.

Marco Taglietti

Thank you, Frank. Good morning, everyone. Buongiorno. As Elaine mentioned a few minutes ago, on July 26, we and our partner Pierre Fabre were pleased to announce the approval of FETZIMA, a once-daily selective serotonin and norepinephrine reuptake inhibitor, SNRI, for the treatment of depression. We are especially pleased that FETZIMA was approved in the first cycle review by FDA, another first cycle approval for Forest and a significant milestone for the Forest associates, too, with 5 of our Next Nine approved at first cycle.

Let's now do an update on the status of our NDA filing for our COPD fixed-dose combination of Tudorza and formoterol. Our original plan was to submit the NDA around the end of November. Following a pre-NDA meeting with FDA in August, we announced that we and our partner Almirall had decided to delay the filing pending the resolution of comment received from the agency related to CMC specification associated with the fixed-dose combination.

We have analyzed all existing information in our database and are currently in the process of preparing our responses to the comments and questions that were raised during the pre-NDA meeting. Upon completion of this task, our next steps will be to request a meeting to discuss our analysis and respond to FDA's comment and questions. We expect to meet with the FDA early next year. We will continue to provide updates on the status of this program as we move along.

With regard to another upcoming PDUFA date, we and our partner, Gedeon Richter, look forward to hearing from the FDA later next month with regard to our NDA filing for cariprazine for the treatment of schizophrenia and acute mania associated with bipolar I disorder. Cariprazine is also under development in Phase II studies for bipolar depression and as an adjunct treatment in MDD. We expect to report the top line result from these studies during the first half of calendar 2014. With regard to upcoming NDA filings, we remain on track to file the NDA for the fixed-dose combination of Bystolic valsartan during the first -- coming third quarter of 2014.

And to finish, very briefly on 2 other late-stage products. First, our joint collaboration with AstraZeneca for the development of ceftazidime/avibactam is ongoing. We expect the result from the Phase III clinical studies in complicated intra-abdominal infections and complicated urinary tract infections around the middle of calendar 2014.

In September, we were also pleased to announce that the FDA has designated ceftazidime/avibactam as a qualified infectious disease product, also known as QIDP status. The designation was created by the Generating Antibiotic Incentives Now Act, or GAIN Act, which was part of the FDA Safety and Innovation Act, FDASIA, which was signed into law in 2012. The QIDP designation provides certain incentives for the development of antibiotics, including priority review, eligibility for the FDA's Fast Track Program and the 5-year extension of exclusivity under the Hatch-Waxman Act.

Finally, last November, we entered into an agreement with Adamas Pharmaceuticals for the development of a once-daily fixed-dose combination of Namenda XR and donepezil. This program is also ongoing, and we plan to file the NDA during the first half of calendar 2014.

This is all with regard to key events of our development pipeline. And I'm now returning the call over to you, Brent.

Brenton L. Saunders

Thank you, Marco. To wrap up, we had a very strong quarter, which was fueled by a 50% increase in the sales of our next-generation products and expense control. As a result, we are raising our guidance, even though we expect a bit of a step down in the third quarter due to the timing of milestone payments and the doughnut hole rebate. The fourth quarter should be much stronger.

I look forward to completing my review of the business operation and the opportunity to talk with you about the changes and the strategic actions we will be taking to drive sustainable growth and value creation. More to come by January.

Now let me turn it back to Frank for the Q&A.

Frank J. Murdolo

Thank you, Brent. Just before we go to the Q&A, I'll now read the second quarter sales figures for some of our smaller products.

Campral, $2.9 million; Celexa, $3.1 million; Cervidil, $15.3 million; Esgic, $0.2 million; Europe, $41.3 million; generics, $7.1 million; Lexapro, $21.7 million; Lorcet, $0.7 million; Monurol, $1.6 million; thyroids, $10.1 million; and Tiazac, $0.5 million. And just for information, the Benicar third-party sales were $200.5 million for the quarter.

And operator, just hold 1 second please. Okay. We'll now begin our Q&A session. Thank you.

Question-and-Answer Session

Operator

[Operator Instructions] Our first question is coming from Jami Rubin of Goldman Sachs.

Jami Rubin - Goldman Sachs Group Inc., Research Division

Congratulations, Brent, on your new opportunity. Just a couple of questions, I was intrigued with your opening comments about Forest, about what you see Forest is doing well and what Forest is not going to be. I take that as a comment on the company's -- what had been a singular focus on primary care, which as you said has had mixed results, given the much more complex market. Are you signaling a change to the company's business model, a shift away from primary care? And if not, if you can elaborate a bit more on what you were trying to say. And then, secondly, you also hinted at changes to the cost structure to unlock value without jeopardizing new product launches. We've gotten a lot of investor pushback on your ability to do that, just given the diverse portfolio of primary care drugs and the fact that you are still in launch mode and how you're able to cut costs given that scenario. So maybe if you can elaborate a bit on that more as well.

Brenton L. Saunders

Sure. And thanks, Jami, I appreciate the kind words. I think with respect to primary care, I think Forest is a primary care company with now the Next Nine generation -- Next Nine stable of products in the primary care setting. And what I was saying is our #1 priority in the short term is to maximize those products. And I think we have some fantastic products, particularly Linzess, for example, the conversion of Namenda to Namenda XR, as I mentioned, I think we have to get into a hand-to-hand combat in COPD. And Bystolic remains a growth opportunity for us. And when you look at our success in that area, it has been by focusing on the primary care or GP physician and also the specialists. And I think we need to continually think about how we go into that market, how to best utilize our resources in that market. And that is -- what I'm studying with our team here is what are the best ways to maximize our sales, while also being mindful of our costs. But I think we have to deal with the products we have today. And Jami, I would add just one other point. It's not like other companies. These are products that were licensed in. We didn't develop these products here in our labs -- or we didn't discover them here in our labs. We developed them, but we didn't discover them. But we have contractual obligations and only contractual right. So we have to weave our way through this very carefully. But I think we're very committed to being successful with the products we have now as our biggest short-term priority. I think on the cost side, you raise a good point. I think anybody can cut costs. And I think it's -- anybody can walk into any situation and just take costs out. I think what the challenge here is and what the opportunity, ultimately, is -- at Forest, is to cut costs while we grow. And so we're absolutely committed to launching our products exceptionally well. But we also see, I think initially, today is my third week anniversary, mind you, but there are opportunities to reduce the cost base. And you saw it here in this quarter. You saw what happens when we use expense control and cost control to drive the bottom line, it works. There's more opportunities to do that. And over the course of the next several weeks, I'll be identifying those opportunities and coming back and do it. And I would just point out, I think even at my last company, which we did extensive cost reduction, we did that while growing the top line versus just cutting costs. And so I think we will be tough on costs. We'll be aggressive, but we'll also make sure that we do not jeopardize the launch of these new products.

Operator

We'll move next to Liav Abraham of Citi.

Liav Abraham - Citigroup Inc, Research Division

This is Liav Abraham from Citi. Brent, congrats on the new role. And we look forward to hearing your plans early next year. Just a quick question for you. You spoke about using the balance sheet to drive growth. I'd be interested in any commentary you can give on your philosophy regarding business development, accretive -- your preference for accretive versus pipeline deals, your thoughts on diversification, whether that be into new therapeutic categories or new geographies? And then secondly, for Marco, on the LABA/LAMA, following the update on the CMC issue, do you still anticipate that the product will be the second agent in the class to come to market following the recent approval of GSK's product?

Brenton L. Saunders

Great. Well, thank you. I think as we think about using our balance sheet, it will always be a combination of looking at investing for growth and share repurchase versus dividend. And I think every decision we make will be in the context of evaluating those 3 alternatives and the return that we could derive from those 3 alternatives. That being said, I think if we were to identify targets to go out and do deals, I think we would look initially in categories where we already have a presence in order to gain economies and maximize our relevancy in those therapeutic areas. I think if we were to look at something more opportunistic, as we sometimes call it at Forest, I think the hurdle would be much higher in terms of innovation and size of market for us to be willing to do something like that. That being said, I do think we have opportunities to do accretive deals. And that's something that would be a first priority if we were to go out and do something in the growth category.

Marco Taglietti

With regards to the, our LABA/LAMA, with this, we are putting a robust package to address FDA's concerns. And we are getting ready for a meeting with -- we are asking for a meeting with respect to the beginning of early next year to address FDA's concern. So at this point, I think it would be premature to try to predict what FDA will say. But this, I have been in this business for quite a few years and try to predict FDA, if -- it's not really good -- exactly. So we will keep you informed as we get more information. And we will let you know.

Operator

Our next question comes from Greg Gilbert of Bank of America.

Gregory B. Gilbert - BofA Merrill Lynch, Research Division

I have 2 questions. My first is on the Namenda franchise. We heard last quarter for the first time your willingness to at least consider a more aggressive switch to Namenda XR. It looks like the sort of the old-fashioned way of switching is going well so far. It's clearly a better product. It looks like you might get 6 more months of life. So my question is why not commit to discontinuing the IR form? My second question, Brent, is a little higher level. It seems like in the past couple of years, companies -- or investors have been rewarding stocks of companies that have been more focused on M&A and operational and tax synergies than necessarily on companies investing for the longer term. So I wanted to hear your thoughts on that premise and how you strike a balance between what public investors seem to want these days and what might be important longer-term?

Brenton L. Saunders

Sure. So, Greg, let me answer the second question. I'll turn the first question on Namenda XR over to Elaine. Yes, I think on the first question, it's all about striking the right balance. As I've said to our colleagues and I've posted even a video on our website, we need to balance key priorities around innovation, focusing on our execution, investing in hiring and retaining and developing our talented people and a sustained shareholder return. And I think we look to build a sustainable return for the long term. But we can't do that and ignore the short term either. So it's about finding that balance, to be aggressive around cost-cutting, to spend our money like it was our own, to make sure that we're investing in therapeutic areas where we believe the return is high and that we can gain economies of scale or a special edge in the marketplace. And I think if you do all those things right, you don't want to be on one end of the scale or the other. You want to be focused on providing short- and long-term return to shareholders and investing in the business for the future. And this is a long-term game. Pharmaceuticals is not a quick-return business. But there are opportunities, I think, for us to maximize some quick wins while we invest for the future. So Elaine, you want to comment on Namenda XR?

Elaine Hochberg

Yes, great. Thank you for the question. And yes, the issue of a hard switch for Namenda XR has been under very careful consideration here for quite some time. It's taken a lot of hard study. We do believe the invention is very important to the community. And doctors and patients have begun to vote clearly with how the drug is being accepted. So conditions seem to prove that we are right. We got the better product. And now we need to focus on what would be the communication and what would be the execution because all of that needs to be done very well to have the benefit of this drug, of this new invention, really, to move forward. So we will continue our hard study. We will get to short shrift. Luckily, we have Brent, who is somewhat facile at doing this before in some of his other lives. He will be part of that decision-making. And we will alert you when the final decision is taken.

Brenton L. Saunders

Yes. And if I could add just a quick comment. I have experience in doing this before. I think it's something we need to study carefully. And Elaine and her team are doing just that. But it's all about execution. And it's all about the details and getting it right. And so I appreciate you'd like us to just announce it, but in fairness, we need to make sure we have every detail covered, every I dotted, every T crossed before we make a final decision on what we're going to do.

Operator

Our next question comes from Vamil Divan of Credit Suisse.

Vamil Divan - Crédit Suisse AG, Research Division

This is for Brent also and maybe Elaine, just maybe if you could talk a little bit about the mood of the company, obviously, trying to launch the new products but also the concern around some cost reductions coming potentially or at least some more constrained-costs spending environment. So just if you can talk a little bit about kind of how the sales force and the people out in the field, what the mood is there as they're trying to execute on these launches? And then my second question just relates to Namenda XR also and it does seem to be exceeding your expectation. Just wondering, hard switch or not, kind of when you maybe more inclined to update your future expectation on what the conversion rate could be?

Brenton L. Saunders

Sure. No, it's a good question. Look, I've been out and I've been -- today is my third week anniversary. I probably have met with several hundred Forest colleagues either individually or in group settings, small group meetings. I've ridden with sales reps for the better part of last week. And I will tell you, the mood is very positive. I think as I said in my comments, there is a pent-up demand inside of Forest for change. People want change. Now there is a natural skepticism when you implement change that comes to fruition. And I'm very well aware of it having been a change agent at other companies and what happens. But I think we're prepared to deal with it. I have a very open and transparent communication style inside the company I think that people have already found very refreshing. And I think the mood is one of focus on the new products. It's one of energy around the potential for change. And I think it's our job to harness that to provide best results. But I'll ask my colleagues if they'd like to comment on anything they've heard.

Elaine Hochberg

No. I would actually endorse what Brent has said. Our field force for quite some time has been very happy having the opportunity to do serial launches. Not often is that experience in the industry, nor in our own history. And to have done them and to continue to do them and to be about to do another one and another one within the next 6 to 9 months, I think, portends for them a great future. And as we innovate, as we change the opportunity to have their execution be meaningful in the marketplace is very exciting. And I think for inside, relative to the commercial group, we've had our eye on change for quite some time with the launch of Linzess going more to the consumer, very early on with the launch, beginning to look at other techniques because we have the right products available to that experimentation, I think is very essential to an ongoing pharmaceutical concern. So I would second what you've heard here and be part of helping to generate that. Do you want to answer the question about Namenda XR?

Brenton L. Saunders

Why don't you -- Elaine, why don't you take Namenda XR?

Elaine Hochberg

I'll stay with that one. And what I would say to you is we've given you a range, 20% to 30%. Right now with our 17% NRxs, we are tracking on line to that 30% line. And depending on what strategies we pursue for the drug down the road, it could be that or higher. And of course, it is our desire to profitably create the best results on that product as we do or hope to do with all of the products in our portfolio.

Operator

Our next question comes from Tim Chiang of CRT Capital.

Timothy Chiang - CRT Capital Group LLC, Research Division

Brent, just a couple of questions for you. First of all, congrats on the appointment. And secondly, you came from a global company in Bausch + Lomb. I mean, how do you sort of view the global opportunity for Forest outside the U.S.? And then I have a follow-up.

Brenton L. Saunders

Yes. Thanks, Tim, and appreciate the kind words. I think you have to think that Forest has been best when it's focused. We have done a very good job of remaining very focused in the U.S. market. I am currently evaluating our international business. I'll be in Canada on Friday. And I'll be over in Europe in 2 weeks. And I'd like to come back to you when I lay out my plan to speak further about our international operation at that time.

Timothy Chiang - CRT Capital Group LLC, Research Division

And Brent, just one -- the follow-up I had was on the capital allocation. You did sort of hint that you would be doing more on that front. And so how do you sort of view Forest's capital structure today? And how do you think it will be different in a couple of years' time?

Brenton L. Saunders

Yes. Again, I think it's a little early. I think my view has always been that you need to think about capital allocation along the 3 dimensions I mentioned, investing for growth, doing a share repurchase and/or paying dividends. And all the decisions in which we would make to deploy our balance sheet have to be analyzed or reviewed in the context of those 3 choices. And so clearly, we don't have a research engine here. We're a development company. We have to continue to invest for growth. And the question is what do you invest in and where do you put it and what therapeutic areas, do you buy marketed product or develop a product that still needs to be developed. And those are the decisions and questions that we're taking a very hard look at right now. And then of course, you have to evaluate those decisions in the context of whether you return the money more directly to shareholders either in a dividend or a share repurchase. And so that's how we'll think about it. That's the mindset that we'll use in any decision we'll make. And we'll be very disciplined and tough on ourselves when we do those types of activities.

Operator

Our next question comes from Seamus Fernandez of Leerink.

Seamus Fernandez - Leerink Swann LLC, Research Division

Brent, congratulations. Great to have you back in pharma. Just a couple of things. Brent, you mentioned the share repurchase. Just wondering, in the context of the sort of disappointing shareholder returns that you talked about, how would you really kind of position share repurchase in your thought process relative to accretive deals? And I think we've seen some conversation around accretive deals in the past where accretion is projected 2 to 3 years out. How do you think about that kind of communication when it comes to deals? And then separately, this one's actually for Marco. Marco, can you walk us through a little bit of the story around TRV, the Trevena product? This company just recently sought to go public. And we'd just love to -- I'd love to know a little bit of your thoughts around the opportunity and the data there.

Brenton L. Saunders

Yes, and thank you. And I don't think I ever left pharma because that was our biggest business at Bausch when I left. But I think, look, it's kind of what I said before. I think we have to evaluate an accretive deal vis-à-vis the context of us using that capital for a share repurchase and/or a dividend. And I think we have to employ a certain strong discipline when doing that. And as I sit here today, I think that that's a pretty straightforward proposition. It's a mindset. It's a way of thinking about doing these things. But by that same token, we have to get better at shareholder return. But we also have to invest for growth. And we have to find the balance that we can strike between those 2 that is smart and prudent and focused. I'll turn it to Marco for Trevena.

Marco Taglietti

So let me talk about Trevena. And I see all of my colleagues here are trying to making signs that I need to be brief. I mean, so when I start to talk about this, actually I can get quite excited. Let me say, the reason when we did this deal is -- goes back to what actually we're trying to sustain, which has been really the focus in the recent past to really finding products with something innovative, something different that brings something that really will help patients where there is no adequate treatment. In this case, it's acute heart failure. Really, treatment -- it is a long time that there are no new products coming to treatment, furosemide and nitroglycerin are really the mainstay of the treatment. But these treatment have really significant shortcoming. They cause [indiscernible]. They cause fluid retention. This drug is a dual mechanism of action. And in that sense actually we let -- it has a very balanced both vasodilative effect and also cardiac contractility, improving the cardiac contractility. So we believe that this is a product that will have a significant impact on how to treat acute heart failure. As you may know, the Phase IIb study is starting now. And the study is actually conducted by Trevena, but we are working very closely just to follow the implementation of it. So at this point, of course, it's an early development project. So there is a significant amount of risk like any project in Phase II. But our expectations are pretty high based on mechanism of action.

Operator

Our next question comes from John Boris of SunTrust.

John T. Boris - SunTrust Robinson Humphrey, Inc., Research Division

Congratulations, Brent. If you could just go back to the 4 dimensions that you mentioned about successful companies, the first one being innovation, can you maybe articulate for us -- because obviously, the definition of innovation, I think, for a lot of CEOs has changed somewhat over the last 5 years, especially with the implementation of Obamacare and what global payors are looking for. So can you provide us what your definition at least going forward is of innovation? On excellence and execution, when you benchmark Forest relative to your peers, you're spending about 41% to 42% of SG&A. And again, with the health care environment changing, can you talk about when you benchmark Forest with it being at the upper end of the range, how you see that changing or shifting going forward? And then lastly, on shareholder returns, your understanding of what historical returns have been. And you've indicated you want to drive shareholder returns, but just some color on how you're thinking about doing that going forward.

Brenton L. Saunders

Sure. Thanks, John. I think -- when I think about innovation, I think about it broadly in a company like Forest. So clearly, we have innovation in terms of bringing medicines to market that meet unmet need, that drive better patient care and are good for -- good new medicines for doctors to work with patients. I think that there's more to it. It's business innovation. So I think we have to think about how do we go to market? How do we -- do we use DTC? Do we ramp up medical affairs versus retail sales? Do we have more account representatives? There's innovation in how we manage our studies. There's innovation, an example, even at Bausch, we found innovation in our IT department when they figured out that our lens cleaners could be used on iPads and did a clinical study for Apple to get it in the Apple store. So there is innovation in lots of places that you can turn cost centers into revenue centers or you can think of turning things upside down. And really, at the end of the day, what I'm looking for, John, is a mindset that everybody just doesn't fall into the status quo way of thinking, that we are a company that continues to shake things up. It's okay to try things. We learn from our mistakes. We don't repeat them, but we actually try new things. And that's a mindset that's embedded in Forest. And I'd like to exploit it and make it even stronger. I think as you think about SG&A and how we benchmark at the upper end of the range, I think that, that is not where we want to be. That's pretty clear. And it's pretty simple. I think we have to just find a way to really take a hard look at our SG&A expense and make sure that we launch our products exceptionally well. You only get one chance to launch a new product. And you only get one chance to set the curve the way you need that curve to lay out. And so we want to make sure we don't do anything to disrupt that. But there's clearly opportunity to take cost out and improve that benchmark. And I would like to see us benchmark much more competitively than be at the top end of that range. And I think, lastly, your question was with respect to shareholder return and how we think about that. I mean, again, it's very straightforward, again 3 weeks in, that we have to find the right balance between investing for growth and returning money directly back to shareholders, vis-à-vis either a share repurchase or dividend. And all of our decisions have to be evaluated in that context. And that's the discipline and rigor that we're going to apply. Does that cover it, John, or...

John T. Boris - SunTrust Robinson Humphrey, Inc., Research Division

No, it sure does. So any kind of decision regarding a dividend, would that potentially come in January, then?

Brenton L. Saunders

Yes. I mean, I think we're going to look at all of our options and all of our opportunities as part of the remaining several weeks of my review and come back and talk to you about it by January, as I said earlier.

Operator

Our next question comes from Ronny Gal of Sanford Bernstein.

Aaron Gal - Sanford C. Bernstein & Co., LLC., Research Division

I have 2. First to Elaine, regarding the Tudorza coverage sensitivity, you've kind of mentioned that capture -- allowing -- being allowed in Humana was a big push for you guys. What essentially does it mean to go to combat hand-to-hand in the LAMA market? Does that essentially mean looking to gain coverage through discounts? Essentially, can you just help us understand where is kind of the frontier in terms of being able to push this product forward? And second more broader question, regarding the cash that sits in Ireland, can you guys give us a little bit of your understanding of how this cash can be used? Obviously, there's some restriction have to do with the fact of the money to pay tax in the United States. Can you just something explain to us, what can you do with that? Can you use it to lever the company? What essentially are the restrictions there?

Brenton L. Saunders

Yes. I think, Elaine, you want to take Tudorza, then we'll have Frank deal with the cash. See, she's already in hand-to-hand combat.

Elaine Hochberg

Ronny, it's our normal position. I think it means on every front. We have in terms of promotion one of the biggest programs out there right now and we're committed to it. I think on the managed care front, I think it means being attuned to what payors need to be able to let the invention be experienced as broadly as possible. We have the patience to work with the Medicare Part D calendar and begin to penetrate. And you can see us marry both our effort, as well as those kinds of strategies to try to push the drug. And I think over time, the whole franchise is one that we will look to capitalize on to make us relevant in the COPD space, in which as you well know, there are many competitors with lots of different types of assets and capabilities. And the way we entered CNS an unknown and now have become a household name, it's our intent to do that over and over again. And COPD is a good testing ground for us.

Aaron Gal - Sanford C. Bernstein & Co., LLC., Research Division

So Elaine, what is the difference now from what you've done before? Because obviously, the franchise has kind of had a hard start. How are you changing the mix?

Elaine Hochberg

We've done a lot of things even on this one. We launched knowing that getting access to managed care would be different. So that we entered with programs to help support people getting access and experiencing the drug. Some of the outreach that we have done on other therapeutic areas like Linzess we have, in fact, ramped up on Tudorza because there clearly is an intimacy between patients and medications, particularly with something that has a device as well. I think if you look at any of our educational opportunities with patients to show them how to use the drug, support telephone line for questions, I think our 360 view of the situation has brought in a lot of new elements that are new to us, maybe not as new in the industry, but ones that we are able to capitalize on very quickly and surround our drug -- and I think through not only possibly in COPD, in everything going forward, surround our drug with the messaging and the services that make that molecule experience well.

Brenton L. Saunders

Yes. And Marco, you want to add?

Marco Taglietti

Yes. And when we're talking hand-to-hand combat, it's not only the commercial group, in R&D, too. That is where we're really shifting a lot of our activities really to support with health economics, with real-world data studies, really to help the commercial organization to achieve their goals. So creating data, data that helps really to have market access.

Brenton L. Saunders

And I have to tell you, I was in the field with a rep doing Tudorza or 2 reps actually doing Tudorza. And I would tell you that doctors like the device. They really like the molecule and the medicine, but they don't like the pre-auth. And so as we gain access and they don't have to deal with pre-authorizations, that will be a big factor for trial. And I think once they see trial, they'll use it. They also like that there's a certain patient population that they like the second improved lung function at night. And that was also something that I heard loud and clear from the customers and the doctors that if they have a patient that's reaching for a rescue inhaler at night before they go to bed or in the middle of the night when they wake up or first thing in the morning that they're really looking at another option versus current -- the big dog in the market is Spiriva. So it has -- it's hand-to-hand combat, but it can't just happen at the rep front. It has to happen in data. It has to happen in managed care. And it has to happen in every aspect, as Elaine said, the 360.

Francis I. Perier

And, Ronny, as you know, we've got over $3 billion of cash basically offshore. And as in the past, we've used that largely for business development opportunities. So that restructured most of our transactions of business, all the transactions around utilizing Irish cash with very appropriate structures, including the acquisition of Clinical Data. Short of business development and business expansion opportunities for that resource, you always have to be careful that you're not going to trigger a subpart F dividend. And so you can't basically lever it up and pledge it. That would trigger subpart F dividend, et cetera. So we're always looking for, I think any good development opportunities, as well as alternative vehicles to make greater utilization of that precious asset that we have offshore.

Aaron Gal - Sanford C. Bernstein & Co., LLC., Research Division

So, Frank, what I'm trying to understand is if the options here are essentially buy stuff or buy assets or return cash to shareholders or pay a dividend. I'm just trying to understand how much room you have to choose between the 3? So essentially, are the whole $3 billion available for share buyback, for example? Or is there some portion for them is? Just in terms of parameters as we think about the company forward, how you could be able, potentially, to use the cash?

Francis I. Perier

Well, I think, Ronny, going forward, you need to think about the entire balance sheet that we have available, which includes no debt. So that for a combination of growing the business, returning capital to shareholders either through a dividend or share repurchase, we will certainly use a combination of existing resources that we have, as well as debt on the balance sheet to provide the funding that we need to maximize and strike that balance, as Brent describes, between growing the business and returning capital to shareholders and growing the overall value of the business.

Operator

Our next question comes from David Buck of Buckingham Research.

David G. Buck - The Buckingham Research Group Incorporated

Congratulations to Brent. I'm curious on your thoughts about the period when Namenda goes generic. And just can you talk about maybe the challenges you see in terms of keeping the company growing, and as you look at the business development alternatives, an alternative to basically keep the company in the growth path? And then if I look at the potential to add debt, et cetera, can you talk about whether you're still considering -- if you were considering looking at redomiciling and looking at more flexible options beyond just being a U.S.-based, U.S.-domiciled company to access the cash and have more flexibility in those options, dividend, BD [ph], et cetera?

Brenton L. Saunders

I mean, I think as we think about Namenda, it clearly is a life cycle management strategy to maximize our sales and profits of that particular franchise. And that's the nice thing about having XR and having a combination program and having a pediatric study complete and waiting to file and can get that extension. And so I think we've got time to carefully think through and study very hard what we intend to do and the timeline that, that will give us. And so we can then focus on executing it flawlessly. And we plan to update you guys on that in the coming weeks or months as we think about Namenda. I think as you mentioned, redomiciling or doing an inversion. Look, I think the bottom line is that's become a very expensive proposition. Those companies have had an incredible run. You'd have to overpay, in my view, to gain that status. And that doesn't seem appropriate for a company that has a tax rate that was in the 22% range. And so if we had an opportunity to do something very strategic and accretive that also provided the benefit of inversion, that's fine. But we're not going to go out and overpay to redomicile or invert our tax structure just for the sake of doing that. That would be undisciplined, in my view.

Operator

Our next question comes from David Maris of BMO Capital Markets.

David W. Maris - BMO Capital Markets U.S.

Well, Brent, I have to say, I wasn't going to congratulate you, but -- just because I think it's overdone. But being allowed to ask a question is a great change. So I have to congratulate you for that change already at Forest. So my question's on -- I have 2 questions. First, a simple one. When do you expect Namenda XR generics? And the second one is actually a little bit more complex. On governance, if you think there is a pent-up demand for change, why wasn't a change done before? Why is now the right time? And even the board composition has the former CEO, the former Chairman, the former Head of R&D. Do you think that we'll also see over time, some changes to the board to have a fresher perspective on things?

Brenton L. Saunders

Yes. Well, thanks for asking the question, and thank you for the congratulations. It's always nice to start with a kind word. Look, I think as you think about Namenda XR, we have a very long patent on that going out well into the late 2020s. And so I think we clearly expect that we need to manage our programs, the combination and everything else that will come along as a very important and critical life cycle management and extension strategy that happens to also have a great benefit for patients. And this is a very difficult drug that's usually provided by caregivers. So the patients don't take it themselves. And I think having it once a day for patients is a big win for them and their caregivers. There's just not a lot of options for patients in this market. And so we need to stay focused on providing good medicine for it as well -- for them as well. I think as you think about change, I think our board is anxious, fully supportive of implementing change. The members of the board are -- have voted unanimously to name me as the next CEO and President of the company. I have their full support to do this evaluation and come back with a very strong change management program. And so I don't think just necessarily changing members will bring about change. I think we have a board with a very open mind to doing what's right to manage this company for the long term. And I have their full support to do that.

Operator

The next question comes from Chris Schott of JPMorgan.

Christopher T. Schott - JP Morgan Chase & Co, Research Division

Brent, great to have you on the call here. I just had 2 questions. First, when you are looking at your existing categories, are there areas that Forest is subscale from a product portfolio perspective? And you've talked about that a couple of times. And if so, what are those areas? And then my second question is maybe a broader portfolio question. Are the challenges facing Forest right now, is this just an execution challenge on these new product launches over the next few years? Or with the state of some of these primary care markets and the mixed launches so far, are some of these products, and not all but some, are some of these just not the right opportunity for the current market environment and should be de-emphasized? And is that part of the strategic review you're looking at of just again some of these, are they getting too much resource and you just need to kind of move on and focus on a narrower portfolio of opportunities?

Brenton L. Saunders

Yes. No, good questions, and thank you, Chris. Look, I think as you think about our current therapeutic areas and being subscale, we are a primary care company. So we're not subscale. We're actually -- have a very strong commitment to the general practitioner. And the general practitioner, I think, recognizes that Forest is committed to them as well. So even if you go back in time, and albeit circumstances were very different in the marketplace, but a drug like Lexapro generated about 80% of its prescription volume from the primary care or general practitioner marketplace. And so I think you're going to see very similar trends on Linzess, you see it on Bystolic. But that being said, there is an opportunity to create economies and relevancy by bringing in additional products in existing therapeutic areas. So think cardiovascular. If Trevena comes through or we find additional marketed product that we could add into the cardiology call or the primary care call talking about cardiology, that would be an efficient way of making those calls and would increase our relevancy not only to our customers, but to the thought leaders and other potential partners in that space that would want to potentially give us their assets in the cardiovascular community. So that's how -- I use that as a way of example, but that's how I think about the business. It's not about necessarily subscale. It's more about generating relevancy in economies. I think on execution challenges, I think we clearly have some so I don't want to say there aren't -- execution is always the bread-and-butter of any task. But I think in fairness, when you look at the current portfolio, it's about thinking about trying new things, thinking about the way the market is changing, the different parts of the country that have different challenges. It's not a uniform approach to the entire 50 states, for example. And then I think you have to think about the product base. So like take a Savella, for example. Here's a product that we manage very differently. We don't invest a lot of money in promotion and marketing, but yet it becomes a very profitable program for us. So there are no sacred cows. I think we're going to take a very hard dispassionate view of all of our programs, products, opportunities and challenges and come back at the appropriate time with thoughts around how we're going to do things even better and stronger.

Frank J. Murdolo

Great. Brent, thank you very much. Thank you, everyone, for joining us this morning. And that will complete our call now.

Operator

Thank you. This does conclude today's teleconference. Please disconnect your lines at this time, and have a wonderful day.

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