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Executives

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

Frank J. Murdolo - Vice President of Investor Relations

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

Analysts

Gregory D. Fraser - BofA Merrill Lynch, Research Division

David Risinger - Morgan Stanley, Research Division

David Amsellem - Piper Jaffray Companies, Research Division

Gary Nachman - Susquehanna Financial Group, LLLP, Research Division

Seamus Fernandez - Leerink Swann LLC, Research Division

Alan Sonnenfeld

John T. Boris - Citigroup Inc, Research Division

Corey B. Davis - Jefferies & Company, Inc., Research Division

Catherine J. Arnold - Crédit Suisse AG, Research Division

Forest Laboratories (FRX) Q2 2012 Earnings Call October 18, 2011 10:00 AM ET

Operator

Good morning. My name is Sarah, and I will be your conference operator today. At this time, I would like to welcome everyone to the Forest Laboratories Second Quarter Fiscal Year 2012 Earnings Conference Call. [Operator Instructions] Thank you. Mr. Murdolo, you may begin your conference.

Frank J. Murdolo

Thank you, Sarah, and good morning, everyone. Thank you all for joining us today for this second quarter fiscal 2012 conference call. Joining me today is Frank Perier, our Executive Vice President of Finance and Administration and Chief Financial Officer; and Marco Taglietti, our Senior Vice President, Research and Development and President of the Forest Research Institute. By now, each of you should have seen the earnings release that we issued around 8:00 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.

Let me now turn over the call to Frank, who will comment on the business during the quarter.

Francis I. Perier

Thanks, Frank, and good morning, everyone. I'll start today's call by reviewing key operating events as well as the financial results for the quarter. And then turn the call over to Marco, who will review the R&D pipeline achievements during the quarter.

Suffice it to say, we had a very busy first -- we had a very busy quarter. In August, we and our partner, Ironwood Pharmaceuticals, announced that we had filed our NDA with the FDA as planned for the submission of linaclotide for the treatment of irritable bowel syndrome with constipation and poor chronic constipation. In addition, 2 weeks ago, we and our partner, Gedeon Richter, announced positive Phase III results for cariprazine for the treatment of acute mania associated with bipolar I disorder. Marco will provide you with more color in a few minutes. We also announced an additional accelerated share repurchase transaction in the amount of $350 million. This is in addition to a $500 million ASR that we announced in early June.

Turning to our in-line products, Lexapro sales in the quarter totaled $596.1 million, an increase of 4.7% from the year ago period. Sales were on target despite the expected modest TRx share decline, which continued to be offset by market growth and price increases.

Sales in Namenda were $336.8 million, growth of 8.6% year-over-year. During the quarter, we saw an uncharacteristic dip in both the Alzheimer's market and for Namenda prescriptions. We are investigating this data as it is not consistent with the sales activity that we are seeing.

We received notification today that the USPTO has issued a second method of treating Alzheimer's disease patent for Namenda XR. This method uses a daily -- once daily 28 milligram modified release formulation of memantine. The patent will be listed in the Orange Book in the next 30 days.

Namenda XR is a next generation once-daily formulation of the currently available Namenda. The new formulation is a convenient, higher dose 28 milligram beaded capsule. The safety and efficacy of Namenda XR were established in a clinical trial of 677 moderate to severe Alzheimer's patients currently on any acetylcholinesterase inhibitor. The results indicate that patients treated with Namenda XR plus any acetylcholinesterase inhibitor experienced physically significant benefit in cognition and clinical global status and had favorable side effect profile compared to acetylcholinesterase monotherapy. Combination use with acetylcholinesterase inhibitor remains the most widely applied dosing regimen and accounts for some 60% of total Namenda IR use. Pending a thorough review of the just-issued patent, we currently anticipate launching Namenda XR in later 2012 or early 2013.

Bystolic sales in the quarter were $82.3 million, growth of 29.2% year-over-year compared to sales of $63.7 million last year. Bystolic sales continued to perform very strongly with solid prescription volume growth. We continue to see an encouraging mix of patients, including significant proportions of those switching from generic beta blockers and those new to beta blocker therapy.

Our approach to physicians continued to emphasize the use of Bystolic as the first add-on agent to standardize first-line agents and this message appears to be increasingly well received. It represents a significant change in beta blocker treatment regimen for hypertensive patients.

This month, we will be launching the results of a new study that evaluate the effect of initiating therapy with Bystolic and an ace inhibitor in patients with stage 2 hypertension. This is the fourth study that we’ve released in the past 2 years demonstrating the blood pressure lowering effect and tolerability of Bystolic.

Bystolic has a growing base of approximately 217,000 prescribers, which includes primary care physicians and cardiologists. Approximately 98% of physicians are repeat users of Bystolic. While cardiologists' share continued to exceed national share for Bystolic, primary care physicians continued to generate higher prescription volume than cardiologists. At nearly 4 years post-launch, Bystolic’s NRx volume has surpassed many antihypertensive agents when looking at launch in-line NRx volume.

The TRx launch in-line volume is outpacing Benicar, a first-line ARB. Since launch in 2008, approximately 1.38 million patients have filled Bystolic prescriptions. Importantly, younger patients continue to comprise a higher percentage of Bystolic patients than they do for other beta blockers and other antihypertensive agents in general. 57% of Bystolic patients are younger than 65 compared to 45% for other beta blockers and 51% for the general antihypertensive market.

Overall, in the managed care front, our access without any step added or prior [indiscernible] restrictions covers approximately 85% of total beta blocker lives.

Turning to Savella, which we launched in April 2009, the sales in the current quarter are $25.5 million, growth of 19.1% versus a year ago. Our promotional activities have succeeded in driving patient and physician experience with Savella, and we continue to be encouraged by the solid uptake and the positive response in Savella's profile and performance with specialists and general practitioners, as well as consistent improvement in patient adherence rates.

The fibromyalgia market grew about 17% in the quarter, and Savella's September TRx share was 7.5% of the fibromyalgia market. Savella continued to be among the fastest-growing products in the category. There have been approximately 90,000 cumulative prescribers since launch and repeat prescribers continue to account for over 90% of Savella weekly prescribers.

Over 80% of Savella's business is coming from continuing patients with the remainder of the business primarily coming from new patient starts as add-on therapy. We are also seeing switches to Savella from multiple other therapeutic categories, including opioids, NSAIDs and SSRIs. This is a strategic achievement as around 75% of the fibromyalgia TRxs are written for those older categories. In total, over 85% of Savella-treated patients are on polytherapy for their fibromyalgia, which is similar to the current experience for Cymbalta and Lyrica.

We have exceeded our original managed care launch goals and have achieved unrestricted formulary position, either Tier 2 or Tier 3 in the commercial plans, covering around 80% of the targeted prescriptions.

Teflaro sales in the quarter were $5.3 million. Following a scientific launch last December, Teflaro was officially launched at the end of March with approved marketing materials. We are targeting approximately 2,200 key hospitals and hospital systems. Let me update you with some key performance statistics.

Since product availability in January, Teflaro has generated over 100,000 days of therapy, which is 3x the volume since June. Teflaro has a strong user base with 2,014 purchasing hospitals and 54% increase over the number of hospitals at the end of June, and ranks second among the past 4 antibiotic product launches in the U.S. including CUBICIN, VIBATIV and Doribax. Importantly, about 3/4 of those hospitals have purchased more than once and 50% have purchased 5 or more times. From launch to date 883 target hospitals have added Teflaro to formulary, a 53% increase over the number of hospitals at the end of June. And 446 hospitals have unrestricted access, which is a 43% increase versus the number of hospitals at the end of June.

As we move into the final calendar quarter of this year, a large number of hospitals and hospital systems are currently reviewing their formularies and we expect to have access to an even greater number of formularies. Importantly, as we mentioned in July, after just 6 months, the Center for Medicaid and Medicare Services or CMS has added Teflaro to the specifications manual for National Hospital Inpatient Quality Measures, otherwise known as Core Measures, as a recommended initial antibiotic treatment for community acquired bacterial pneumonia.

In addition, the addition of Teflaro applies to hospital discharges on or after January 1, 2012. This is a very encouraging endorsement and should increase the use of Teflaro as a first-line therapy for community acquired bacterial pneumonia. Keep in mind that Teflaro competes in a very large market with approximately 23 million annual days of therapy each for community acquired pneumonia and skin infections. Value to brand prices worth nearly $4 billion. The WAC price for Teflaro is $82 per day of therapy as a reminder.

Turning to our most recent launches. At the end of August, we hosted a National Sales Meeting for all of our sales forces to launch both Daliresp and Viibryd. Over 3,500 sales, marketing and support teams were present and the level of energy was absolutely electrifying. Approved marketing materials were introduced for both products at the meeting.

In early September, we began our medical education programs for physicians and initiated use of the new marketing materials. To support these 2 important product launches as well as our actively marketed products, we have expanded our field sales organization by about 300 representatives with the creation of a second specialty sales team. Over 1,200 sales representatives will be promoting each of the new products.

Let's start with Daliresp, which the FDA approved in February 28 as a treatment to reduce the risk of COPD exacerbations in patients with severe COPD associated with chronic bronchitis and a history of exacerbation.

Sales in the quarter were $1.2 million. Last quarter's sales primarily represented the wholesaler stocking when we began shipping Daliresp to the trade around the beginning of June. With an introductory wholesale acquisition cost of $5.75 per day, Daliresp will participate in a very large COPD market that is currently valued at approximately $5.5 billion with over 26 million prescriptions written annually.

Based on Daliresp's indication for severe COPD, we will have access to about half of that high-value population of therapy which spans the moderate to severe patient population. We are pleased with the early prescription data and trends for Daliresp. As of the week ended October 7, there have been approximately 27,000 prescriptions written. Over 5,000 physicians have already tried Daliresp with approximately 50% using it more than once.

Since launch, primary care physicians and other healthcare providers have written nearly 70% of the prescription, and specialists around 30%. Physicians' interest in Daliresp is very high with awareness of the product well above the 80% -- 80% to 90% level. However, Daliresp is very different than traditional inhaler products such as Spiriva or Advair. And therefore, our focus right now is on educating pulmonologists and primary care physicians about how Daliresp works and explaining where, when and how Daliresp should be used to reduce the risk of exacerbations in patients with severe COPD.

This educational process will, of course, take time as we teach prescribers about the first and only PDE4 inhibitor. The support and advocacy of pulmonologists is a key component of this, and early signs of adoptions by this group are very encouraging, with new prescription share amongst specialists exceeding national share and reaching almost 2%.

We expect prescription volume to increase significantly over the next several months as physicians gain more experience with when and how to use this novel compound, alongside Spiriva and/or Advair, which, as expected, accounts for over 70% of its use.

In our early experience program, we distributed 30-day sample packs to 35,000 key pulmonologists and primary care physicians and 7-day sample packs to initial 50,000 physicians. We expected to take approximately 6 to 9 months for this 30-day supply to wash through the system before prescription trends start to normalize. Our sales force has reached 80% of physicians and we expect to reach the balance of our audience or almost 20,000 physicians over the next several months. Managed care plans are currently evaluating Daliresp for formulary placement, and we have already had some important wins. Our target for unrestricted formulary access is for over 80% by the end of the first year on the market.

Turning to Viibryd. Sales in the quarter were $5.3 million. Sales last quarter primarily represented the wholesaler stocking when we began shipping Viibryd to wholesalers around the middle of June. Viibryd's wholesaler acquisition cost is $3.95 per day.

Physician response so far has been very positive and prescription levels are very encouraging, tracking close to Pristiq, the last major antidepressant launched in the U.S. As of the week of October 7, there have been approximately 68,000 prescriptions written by over 13,500 prescribers and approximately 50% are repeat writers. Since launch, about 31% of scripts have been written by psychiatrists and approximately 69% by primary care physicians and other healthcare providers.

We are very pleased with response to this product by not only specialists but also primary care physicians. Managed care access is positive and developing, and unrestricted formulary access continues to grow. Our goal for managed care for -- our goal for managed care access -- for unrestricted managed care formulary access is 65% by the end of year one on the market with one step added.

We are also using our early experience program with Viibryd, distributing 30-day sample packs to 35,000 key psychiatrist and primary care physicians and 14-day sample packs to an additional 65,000 physicians. Here again, we expect to take approximately 6 to 9 months for the supply to wash through before prescriptions trends begin to normalize.

There are 3 aspects to think about as we position Viibryd in the market. The first is that it does work differently and represents a real alternative to SSRIs and SNRIs. We would describe this mechanism of action as being novel but familiar, combining the serotonin reuptake inhibition with the 5HT1A partial agonist activity. Physicians describe the effect of the drug observed in clinical trials as meaningful, consistent across multiple depression rating scales and similar to other SRIs. And lastly, the tolerability profile is quite favorable.

Over 30 million patients are taking antidepressants in the U.S., and roughly 50% of them switch from one antidepressant to another due to either lack of efficacy or tolerability. We expect that Viibryd will be a valuable treatment option for a meaningful portion of those patients as well as newly diagnosed patients. Overall, we are pleased with the strong performance of our in-line products and their positioning within the national managed care plans.

Let me now move on to review the financial results for the quarter. Total revenues for the fiscal second quarter, which are inclusive of product sales, pretax earnings from Benicar, interest and other income totaled approximately $1.2 billion, an increase of 7.4% from last fiscal year. Fiscal second quarter revenues were comprised of approximately $1.1 billion of product sales versus $1 billion of product sales last year, representing growth of 9%; $33.6 million of contract revenue primarily from the Benicar agreement; as well as $5.1 million of interest income. Wholesaler inventories are at normal levels of about 2, 2.5 weeks, an increase by about 2 days from last quarter when they were just over 2 weeks.

Gross margin in the quarter came in about 76.6% compared to 76.3% in last year's second fiscal quarter. SG&A spending during the quarter was $388.7 million, up 22.8% from $316.4 million in last year's second quarter. The current level of spending reflects the resources and activities required to support our currently marketed products, particularly our newest products, Teflaro, Daliresp and Viibryd, including the cost of the joint launch meeting in August.

Research and development spending in the current quarter was $197.3 million compared to $154.5 million reported in the second quarter of last year. The current quarter includes product development milestone charges of $30 million compared with $3 million in milestone payments last year. Research and development spending is primarily in support of an expanded late stage development program spread out over multiple pipeline projects. The company's reported effective tax rate for the quarter was 21.7%, an annual effective tax rate excluding all onetime items is expected to be 22.4%.

In August, the company announced that it had entered into an agreement with Morgan Stanley to repurchase $350 million worth of our common shares utilizing an accelerated share repurchase program or ASR. Pursuant to the ASR transaction, Morgan Stanley delivered 9.7 million shares in the quarter. This current ASR transaction is in addition to the ASR transaction announced on June 3 of this year to repurchase $500 million worth of common stock under the same 2010 share repurchase program. We currently have 17.3 million shares remaining under our 2010 share repurchase authorization from the Board of Directors. Actual shares outstanding as of September 30 were approximately 267,150,000, a decrease of approximately 18.5 million shares from last year.

Our cash and marketable securities balance on September 30 was approximately $2.9 billion, a decrease of $82.2 million from last quarter. Of the $2.9 billion total, approximately $200 million or 7% of our cash and marketable securities are domiciled domestically with the remainder maintained by our international subsidiaries.

With regard to our use of cash, we have judiciously managed our cash resources to facilitate the growth of our business and return of capital to shareholders. Since 2004, we have repurchased $4.7 billion worth of stock, including the 3 ASR programs in the last 2 years. In addition, since 2007, we completed the acquisitions of Cerexa, Novexel, the Gruenenthal European colistin business and Clinical Data for a cumulative total of $2.1 billion and invested an additional $700 million in initial new product license agreements over the same period for a total of $2.8 billion invested in business development.

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

Marco Taglietti

Thank you, Frank. Here in Forest, in the organization, we are truly going through exciting times as we move the development of all the products of our pipeline forward. This past quarter, we filed the NDA submission for linaclotide. This is less than 6 weeks after we filed the one for aclidinium, so 2 NDAs in a 6-week window. And now, we look forward to the action date during the second quarter of calendar 2012 for both compound.

In addition, as we move into the first half of calendar 2012, we will be reporting several pivotal Phase III studies for levomilnacipran in MDD and for cariprazine in acute bipolar mania and schizophrenia. These pivotal studies will be the basis for the NDAs of these 2 product, which will be submitted in the second half of 2012.

In fact, just 2 weeks ago, we and our partner, Gedeon Richter, announced the preliminary top line result of the first one of this series of studies with very positive result of the first Phase III study for cariprazine patient with acute mania associated with bipolar I disorder.

The data showed that cariprazine-treated patient with acute manic episode experienced significant symptom improvement compared to placebo-treated patient as early as day 4 of treatment, and day 4 was the first study time point. And we had a significant difference at each subsequent time point studied thereafter. So very, very promising results of this Phase III multicenter double-blind placebo-controlled parallel group study that evaluated the efficacy, safety and tolerability of cariprazine monotherapy in patients with acute mania.

During the 5-week study, 312 men and women, 18 to 65 years of age meeting the criteria of diagnostic and statistical mania of mental disorder for bipolar I disorder were randomized and received at least one dose of either cariprazine, 3 to 12 milligram a day or placebo.

Following a washout screening period of 4 to 7 days, patients were given 1 to 4 capsules of either cariprazine or placebo daily. The treatment period lasted 3 weeks and was followed by a 2-week period of safety assessment. Patients were hospitalized while screening and for at least the first 14 days following the initiation of treatment. The primary protocol specified endpoint was changed from base line to week 3 on the YMRS, using the mixed effect model of repeated measured analysis. The YMRS or Young Mania Rating Scale is a comprehensive clinician-rated instrument used to assess the severity of mania in bipolar patients and includes such parameters like elevated mood, increased motor activity, energy, sleep and irritability.

Statistical significant improvement was noted in patients receiving cariprazine relative to patients receiving placebo on the YMRS scale, with the improvement of 19.6 point for cariprazine versus 15.3 point for placebo, so a 4-point difference with a p-value of less than 0.001 using an MMRM analysis.

Overall, the premature discontinuation rate of all causes including adverse events related were 32% for patients receiving cariprazine and 31% for patients receiving placebo. The most common adverse event greater than 10% and twice the rate of placebo that was observed in the studies were akathisia, extrapyramidal disorder, tremor, dyspepsia and vomiting. Cariprazine was generally well tolerated with discontinuation due to adverse event observed in 10% of the cariprazine group and 7% of the placebo group.

Further analyses of the data are currently underway. We expect to report the top line results from the second acute mania program and for both schizophrenia studies during the first half of calendar 2012.

Cariprazine is also under development in Phase II studies for bipolar depression and as an adjunct treatment in MDD. We're also developing F2695 also known as levomilnacipran as part of our collaboration with Pierre Fabre.

Levomilnacipran is a once daily, selective serotonin and norepinephrine reuptake inhibitor, SNRI, for the treatment of depression. Development of F2695 is contracted. We initiated the Phase III clinical trials during the summer of 2009. We reported top line results for the first Phase III clinical studies in January 2011. The primary endpoint in this first study was the Montgomery-Asberg Depression Rating Scale clinician ready -- rated, MADRS. And although the overall difference observed between the drug-treated and placebo-treated patients was not statistically significant, levomilnacipran consistently demonstrated improvement relative to placebo over the course of the trial.

In July, we reported the outcome of the second Phase III trial. We showed positive results both statistically and clinically. Analysis of the preliminary top line data indicated a statistical significant improvement was achieved for levomilnacipran-treated patients for all dose groups compared to placebo on the primary efficacy endpoint, which was changed from baseline to end of week 8 in the MADRS total score.

The results of this second trial are consistent with the previous finding in the 553 patient Phase II study of levomilnacipran, which demonstrated statistical significant improvement compared to placebo with a p-value of less 0.0001 on the primary endpoint, which was changed from baseline in total score of the MADRS. Two additional placebo-controlled Phase III trials are ongoing and we expect the results to become available during the first half of 2012.

Let's turn to our anti-infective pipeline. With Teflaro now approved and launched, our focus is moving now to the combination with avibactam, which was formerly known as NXL104. Avibactam is a new broad spectrum, beta-lactamase inhibitor. It inhibits several classes of these bacterial enzymes called beta-lactamases that break down and inactivate beta-lactam antibiotics such as cephalosporins, penicillin and carbapenems, making the pathogen producing these enzymes resistant to these antibiotics. Avibactam covers a broad range of beta-lactamases, including the extended spectrum beta-lactamases, the so-called ESBL. No other beta-lactamase inhibitor currently available on the market does that. Avibactam is perhaps one of the broadest beta-lactamase inhibitors now in development in clinical trials. We're combining avibactam with ceftaroline and with ceftazidime to enhance the spectrum of activity of these antibiotics and counteract the resistance especially in gram-negative pathogens, which are becoming a major unmet medical need in both established and emerging market.

Our anti-infective product portfolio now addresses practically the entire spectrum of clinically relevant bacterial pathogens by covering both gram-positive pathogens with ceftaroline and ceftaroline/avibactam, and also gram-negative pathogen with ceftazidime/avibactam.

In May, results were presented from 2 Phase II clinical trial for ceftazidime/avibactam in patients with complicated intra-abdominal infection and complicated urinary tract infection during the European Congress of Clinical Microbiology and Infectious Disease held in Milan. The results from the 2 studies met their primary endpoint, demonstrating that ceftazidime/avibactam achieved high clinical cure rate and was well tolerated in patients with cIAI and cUTI.

Ceftazidime/avibactam combines a broad spectrum cephalosporin and the novel beta-lactamase inhibitor. And for potential users, a first-line treatment for hospital-acquired gram-negative bacterial infections, including those caused by Pseudomonas aeruginosa and extended-spectrum beta-lactamase producing organism. The complicated UTI Phase II trial showed that ceftazidime/avibactam had a similar high rate of efficacy compared with established treatment given to patient with a complicated urinary tract infection. The complicated intra-abdominal infection Phase II trial showed that ceftazidime/avibactam given with metronidazole had a similar high rate of efficacy compared with established treatment given to patients with complicated intra-abdominal infections.

Development of ceftazidime/avibactam is a joint collaboration between Forest Laboratories and AstraZeneca. With these studies now in our hand, we intend to move forward with AstraZeneca into Phase III studies with a ceftazidime/avibactam program probably in the next few months.

Moving now to linaclotide. We and our partner, Ironwood Pharmaceuticals, submitted to the FDA in August, as planned, the NDA for linaclotide for the treatment of IBS with constipation and chronic constipation based upon efficacy and safety results from a Phase III program, comprising 4 double-blind placebo-controlled trials and 2 open-label long term safety studies. We expect FDA notice of acceptance of our NDA by the end of this month.

A total of more than 2,800 patients received a once-daily dose of either linaclotide or placebo across the 4 placebo-controlled clinical trials. Additionally, over 4,200 patients have enrolled into ongoing open-label safety trials, and more than 2,000 of these patients have received linaclotide for at least 12 months.

Updating now our respiratory pipeline. In June, we submitted to FDA the NDA for aclidinium for the treatment of COPD. The filing was based on 2 positive Phase III clinical studies that investigated the twice-daily demonstration of aclidinium, the ACCORD I COPD study that was completed in early 2010 and the ATTAIN study that was completed by our partner, Almirall, this past January. Here, again, with a standard 10-month review time line, the PDUFA target action date is expected to occur in April 2012 and the NDA was just recently accepted by FDA for review.

We view aclidinium as part of a broader respiratory franchise opportunity, which includes aclidinium as a fixed-dose combination with formoterol, the inhaled long-acting beta 2 agonist, LAS 100977 and Daliresp. With regard to the fixed-dose combination of aclidinium and formoterol, we reported 2 Phase IIb dose ranging studies comparing different fixed-dose combinations of aclidinium and formoterol to aclidinium alone, formoterol alone and placebo administered twice a day in patients with moderate to severe COPD.

The Phase III studies with a fixed-dose combination began last month as planned and we anticipate top line results from the trial to report out during the first half of calendar 2013.

We are also working with Almirall to develop and market and distribute LAS 100977 in the United States. LAS 100977 is a very potent inhaled once daily long-acting beta 2 agonist. We, along with Almirall, want to develop it in combination with a yet undisclosed corticosteroid for the dual indication of both asthma and COPD. Additional Phase II studies are planned to start in the coming months.

To further enhance the value of this respiratory franchise, we have access to a unique dry powder inhaler delivery device developed by Almirall. This device is convenient to use for the patient and easy to develop for higher or more frequent dosages, as well for various combination agent. We believe that this DPI device will add to the competitiveness of our respiratory franchise.

Also in respiratory, we are supporting the launch of Daliresp and we're planning additional post-marketing studies for Daliresp to meet FDA's post-approval requirement and to further characterize the profile of Daliresp in the approved indication.

In April, we announced a licensing agreement for the cardiovascular product, azimilide, which is a class III antiarrhythmic agent. It was originally developed by Procter & Gamble and has been studied in over 5,300 patients to investigate its potential as an antiarrhythmic agent. Based on its mechanism of action and on the results of clinical trials, azimilide was determined to be best suited for use in patients with a history of life-threatening ventricular arrhythmias and to have an implantable cardiovascular defibrillator.

In 2006, following submission of data from the Shield 1 Phase III clinical study, FDA under its then operable review processes issued an Approvable Letter requesting an additional clinical trial for azimilide. In 2010, the FDA agreed to one additional Phase III studies to support the regulatory submission for azimilide in the U.S. Shield 2 will be conducted under a special protocol assessment with FDA, and we plan to start this study before the end of this calendar year.

Also in the cardiovascular area, our transaction with Clinical Data brings to Forest, apadenoson, a potent agonist of the adenosine A2A receptor subtype with improved selectivity for this receptor over other subtypes. Apadenoson is a coronary vasodilator in Phase III development as a pharmacologic stress agent for radionuclide myocardial perfusion. ASPECT 1 and ASPECT 2 are both non-inferiority studies comparing apadenoson to Adenoscan, and the primary endpoint is image concordance. Enrollment is ongoing for ASPECT 1 study and in June, we began enrollment for ASPECT 2.

Our R&D development pipeline also includes 2 earlier stage programs. In June 2010, we partnered with TransTech Pharma to license TTP399, a functionally liver-selective glucokinase inhibitor -- activator for the treatment of Type II diabetes. Early Phase I testing suggested that pharmacological enhancement of glucokinase activity may lower blood glucose in diabetic patients.

And finally, last December, we licensed the GRT 6005 from Gruenenthal. GRT 6005 and GRT 6006 are novel first-in-class analgesics with potent activity on opioid receptor like-1 or ORL-1 and the new opioid receptor for the treatment of moderate to severe chronic pain. GRT 6005 has completed the proof-of-concept studies in nociceptive pain. Further Phase II studies are planned prior to initiation of the Phase III studies.

This is all with regards to our development pipeline. Frank, I'm now turning the call back to you.

Francis I. Perier

Thank you, Marco, and so just to recap the business. We have 5 new drugs that we are actively marketing: Bystolic, Savella, Teflaro, Daliresp and Viibryd; 2 NDAs: aclidinium and linaclotide, that have been filed this year and the potential for 2 additional NDAs to be filed next year for levomilnacipran and cariprazine. Collectively, our next 9 group of products. And the company has 6 additional products in Phase II or later that are expected to mature between 2014 and later.

We believe the next 9 are collectively sufficient over time to replace the revenues lost due to the patent expiries of both Lexapro in 2012 and Namenda in 2015 and to provide growth. Forest’s track record of developing new products is one of the strongest in the industry. Over the last 10 years, Forest has received 7 novel drug approvals, including 4 in the last 5 years, outpacing not only its specialty pharmaceutical peers but also some of the world's largest global pharmaceutical companies. In fact, in just over a little over 3 years, 38 months to be exact, the Forest Research Institute has achieved 5 NDA approvals from 5 different divisions of the FDA plus the sNDA approval for the adolescent indication for Lexapro.

Our business development team continue to see interesting and commercially attractive products in the market, and we have clearly demonstrated the ability to compete effectively to secure such important new products either through product licenses or direct acquisition.

Our first priority remains to provide for the future growth of the company's sales and earnings beyond fiscal 2012. In addition to advancing our current pipeline and supporting our existing and future in-line products, we are also actively pursuing new product licenses and assessing potential acquisitions to add to our development pipeline and add in -- and in-line products.

We have made significant progress in creating a robust pipeline that has already delivered significant value and has the potential to deliver even greater value both in the near and long term, with patent protection extending ’20 and beyond. These additions have the potential to feed our existing therapeutic areas, as well as allow us to enter into new therapeutic areas consistent with our opportunistic business model. This combined effort will continue to drive our decision-making and allocation of resources as we look forward to the next decade.

Over the past few years, our dialogue with the investment community has been about building our R&D pipeline. Going forward as we continue to achieve success with our pipeline and launch these new products, you will hear more about the execution of our commercialization strategies. We remain confident in our ability to launch additional new products in parallel to advancing our established pipeline.

I'll now turn the call over to Frank Murdolo.

Frank J. Murdolo

Thank you, Frank. I will now read the second quarter sales figures for some of our smaller products. Starting with Campral, $5.4 million; Celexa, $3.8 million; Cervidil, $14.5 million; Esgic, $0.4 million; Europe, $33.3 million; generics, $6.7 million; Lorcet, $1.0 million; Monurol, $0.6 million; thyroid, $10.8 million; and Tiazac, $0.8 million. And just lastly, the Benicar third-party sales for the quarter were $214.3 million. And we'll just take a second here and we'll start our Q&A shortly.

Okay, operator, would you please start the Q&A session?

Question-and-Answer Session

Operator

[Operator Instructions] Your first question comes from the line of Catherine Arnold.

Catherine J. Arnold - Crédit Suisse AG, Research Division

I wanted to really push a little bit more on the issue of samples and formulary access in terms of where we are now and how we'll evolve? Obviously, samples, for instance, are a great way to entice trial and usage but they also are a very big camouflage agent, if you will, for people like me trying to evaluate launches. So wondered if we could go a little bit further in terms of what you're doing? As I look at -- you said you gave 30-day packs, which is basically a prescription out to 35,000 docs for Viibryd. There's been about 67,000 prescriptions written since the drug was available. On Daliresp, you said that you gave out about 8,000 docs 30-day packs and that's -- there's been about 26,000 scripts. So you probably now guess where I'm going here, which is the actual number of docs that got samples are essentially more than 1/2 for Viibryd and about 1/3 for Daliresp. And I'm sure they got more than one sample, so there's probably a lot of volume that we may not be seeing. I guess I want you to just generally comment on that and talk about how this will evolve in terms of your sample program over the next 6 to 12 months. And then the last question I had is on formulary access. You gave us your target, which is great, for a year from now. Could you give us a sense for where you are today?

Francis I. Perier

Sure, Catherine. They're great questions. With regard to the sampling programs, we've consistently used the early experience program to launch our product into the primary care market. And I think there's 2 pieces to the sampling program. With Daliresp, we have distributed 30-day sample packs to the high-prescribing, high-potential physicians. Those are 35,000 key pulmonologists and primary care physicians. In addition, we've distributed 7-day sample packs to an additional 50,000 doctors, so 85,000 doctors in total in the call panels. So suffice it to say that for a patient population that's about 20% as big as the antidepressant population, we've got a lot of samples and a lot of messaging going out to a lot of doctors. So as you say and we indicated, our experience tells us that with these early experience programs, it can take between 6 and 9 months for those samples to work their way through the system until you get to what's the natural level of prescriptions. What I will say is that we're very encouraged by both the number of prescriptions that have been written to date, as well as where those prescriptions are coming from, both specialists and primary care doctors, and as well as the feedback that's coming back from the marketplace. What we see with Daliresp is that with the feedback that's coming back from prescribing physicians that they're pleased with the results they're seeing to date and that the product is performing largely on track with the product label. Turning to Viibryd, again just to repeat the numbers. Again, we've got 2 different sample presentations for Viibryd as well. We've got 35,000 high-potential prescribers in the antidepressant category who received 30-day sample packs, so a full month of new patients starter kit. You've also got -- there's a 14-day or 2-week sample pack out in the market as well, and that went to an additional 65,000 physicians. So again, about 100,000 physicians receiving samples. And so I think very similar to our Bystolic experience, the early scripts were not indicative of what was the actual patient usage that was going on in the market. And I will say also that with Viibryd, the early physician feedback that we're getting on Viibryd has also been very positive and the sources of prescriptions have also been very strong as well. We're actually getting a portion of patients who are actually naïve to treatment as well as, as you would expect, a bolus of patients who are switched from particularly in SSRI and SNRI over to Viibryd. So in fact, switches are accounting for just about 1/2 of our Viibryd patients. Relative to formulary access, it's early days. We're just off the ground with these launches. And as was the Bystolic experience, it takes 8, 9 to 12 months before you really know where you are with formularies. But I will say that with both products, we have experienced some major wins with major national plans and we continue to work the entire system. We said that our goals for Daliresp were to try and achieve 80% access within the first year of launch and with Viibryd to achieve about 60% access within the first year of launch with a single step at it. So it's early days, but we think we're really very well positioned going into the market.

Catherine J. Arnold - Crédit Suisse AG, Research Division

So Frank, can I have a follow-up?

Francis I. Perier

Sure.

Catherine J. Arnold - Crédit Suisse AG, Research Division

So in other words, what we've seen to date is a very limited point of access on the formulary side with aspirations for strong access a year from now. And essentially on the sample side, I mean this is a very -- what we would consider to be extraordinarily aggressive industry program. Is that fair characterization? And I would also think that there's a relationship as your formulary access grows, you're going to pull back on the samples over the next 6 to 9 months?

Francis I. Perier

Well, I wouldn't say that it's an extraordinarily aggressive sampling program given the base of physicians that we're trying to reach. And I think it's very similar to the sampling programs that we've utilized in the last 2 big launches of both Bystolic and Savella as far as number of samples, the segregation between high-potential physicians and everybody else, as well as the number of physicians we're trying to access. And this also goes back to the same kind of sampling programs that we used for Celexa, Lexapro and Namenda when we launched them. And what we found, Catherine, over time, particularly coming from the Celexa, Lexapro and Namenda experience is that particularly with your lower decile doctors, that the doctors who were involved in those early experience programs became some of your most productive writers over the lifecycle of the product, which is one of the reasons why we invest so heavily in the upfront launch because that bolus of physicians can become very productive for you as they gain early familiarity with the product and how and when to administer it to patients. So again I think the programs that we have are pretty similar to what we've used in the past, and our reach and coverage I think -- we think has been pretty strong to date. With great, really, from the full launch, we're just not even 2 months off of the full launch and we've had great physician reach and access already.

Operator

Your next question comes from the line of Seamus Fernandez.

Seamus Fernandez - Leerink Swann LLC, Research Division

So Frank, maybe you can just give us a little bit more visibility looking out into the future. You guys offered a post-cliff view of the world, the fiscal 2013 to fiscal 2017 guidance during the proxy battle. Can you just give us again 10% top line and 30% earnings growth? Can you just talk about that and kind of the mixes, the pushes and pulls? As I look at 10% sales growth, it's either going to imply some pretty significant leverage in the model to get to that 30% or additional share repurchases. So maybe if you can just walk us through your thoughts along those lines.

Francis I. Perier

Sure, Seamus, and it's a great question. Just to clarify for everyone, in connection with the proxy materials that were made available, we put out longer-term aspirational goals for the company. I wouldn't call it hard guidance at this point. It's an awful long way out. But what we wanted to achieve was between fiscal '13 and '17 top line growth on a compound annual growth rate of 10% and bottom line growth of just over 30% over that time frame. And basically that plan assumes basically what we have in-house today. It doesn't assume any additional business development. It assumes the majority of the products that we have and making it to market for the indications that we're developing them for, but it does not -- it does anticipate that you're investing wisely. You don't invest at a static rate behind the product over its entire lifecycle. You take and you shift your resource investments and stage them as products go from launch to maturity, to the later part of their lifecycle and move your resources accordingly throughout that planning period. I will also indicate that the model also did not assume any additional share repurchase, so I hope that's helpful.

Operator

Your next question comes from the line of Corey Davis.

Corey B. Davis - Jefferies & Company, Inc., Research Division

Two questions. The first one is on Daliresp. Do you think your $60 million fiscal '12 guidance is still reasonable at this point?

Francis I. Perier

Corey, at this stage, we're not going to give any update on any individual line item guidance. What I will say is that from an overall sales standpoint, we're very comfortable with the total top line guidance that we've given on the products.

Corey B. Davis - Jefferies & Company, Inc., Research Division

Second question. Directionally, after Lexapro goes generic, gross margin, should it go up, down or stay the same? And same question on your tax rate.

Francis I. Perier

Sure. Actually when Lexapro goes generic, the gross margin rate stays very pretty much the same. And again, the reason for that is because the actual product cost is a relatively small component in our cost of goods. The largest component in our cost of goods are the royalties that we pay to our licensors. As we look at the mix of products that will be replacing Lexapro, that overall cost of goods percentage stays relatively static. Relative to the tax rate, we haven't really given any further guidance on the tax rate. It stays pretty close, but I will say that we do come under some pressure on the mix of earnings with a higher proportion of earnings coming out of the U.S. versus the international jurisdiction.

Corey B. Davis - Jefferies & Company, Inc., Research Division

Okay. One more quick one. Have you worked out the accounting yet on linaclotide to know how you're going to pay Ironwood for their 50% of the operating profits? Will that go out through cost of goods, SG&A or some other accounting metric?

Francis I. Perier

I'll tell you what, when we get to the launch of -- I mean when we get down towards the approval, we'll let you know exactly how we're going to present it on the P&L.

Operator

Your next question comes from the line of Ronny Gal.

Alan Sonnenfeld

This is Alan Sonnenfeld, sitting in for Ronny. Frank, we had a question on the Namenda prescriptions. I know you mentioned it up in the front end of the call, but I was hoping you could give us a little bit more color. Is IMS missing something? Is there a long-term trend heading down, or is there something else going on?

Francis I. Perier

It's puzzling because if you think about it, demographics alone will tell you that the market shouldn't be in a decline. If anything, it should be maybe reaching maturity with some modest growth. So we're not -- we're puzzled by it. It doesn't align with our sales trends so we really are trying to push back and work with IMS and try and understand what they're seeing in the market versus what we're seeing in actual product moving out the door. I mean we don't have anything additional to add to you that's why in the Q&A or in the prepared remarks, I really told you about all we know at this point about what's going on with the IMS data in the Alzheimer's category.

Alan Sonnenfeld

And are you seeing patients switching away from the product or to the product?

Francis I. Perier

No, we're not -- our market data doesn't indicate there's any switching. In fact if anything, there's probably a slightly more combination use where with Aricept going generic, you really -- and there is a small portion of the cash-paying market where that was always a barrier. We have gotten a small benefit from that phenomenon in the market. But no, we're not seeing -- again, there's nothing to switch away from to. So again, Namenda is the only approved NMDA receptor antagonist approved for moderate to severe Alzheimer's disease.

Operator

Your next question comes from the line of Gary Nachman.

Gary Nachman - Susquehanna Financial Group, LLLP, Research Division

First, on Viibryd. Are some of those gains coming at the expense of Lexapro? Are you finding that you're able to actually shift some Lexapro patients over? And then a little bit more on which patients are using Viibryd. Who is the ideal patient using it first line, and those that are switching, typically how many other antidepressants do they cycle through?

Francis I. Perier

Sure, Gary. Majority of the patients who are taking Viibryd, really the majority who switch to Viibryd were previously taking an SSRI, about 50% of the patients. So if we look at our sources of patients, about 50% of our patients that switched came from an SSRI and about 27% came from an SNRI. So and as you look at the top products where patients are coming from, and it's not due to any marketing strategy from our standpoint. It's really just due to the way that doctors assess their patients, assess what they tried, why the patient failed and what alternatives to go to from a switch standpoint. We're seeing about evenly split about 15% of patients coming from Wellbutrin and 15% coming from Lexapro, and about almost 12% coming from Cymbalta. So it's really kind of across the board between the SSRI and the SNRI category where you're seeing patients switching.

Marco Taglietti

And if I can add, probably the dual mechanism of action is really something that certainly attracts physicians to switch from one to the other and the excellent safety profile that this has been something that we have seen. It's created a lot of interest in the medical class.

Gary Nachman - Susquehanna Financial Group, LLLP, Research Division

Yes, and then for the switches, how many did they typically cycle through?

Francis I. Perier

Typically, a patient will cycle through between 1 or 2 products before they're getting to Viibryd. I think we're starting to -- getting to see a fair amount of patients who switched after 1 or 2 products. But we're also getting a fair portion of product almost 20% who are actually naïve to therapy, which is a very good place to be in this category. And I think it's because physicians look at the product, they look at the label and say can see that it works. From the MDD scores are very similar to the other products, so they know that the product works and it also has an interesting adverse event profile, a good tolerability profile. So we've got a significant portion of physicians over several months of measure who have been using it in actually treating naïve patients in the market, which is very, very important.

Gary Nachman - Susquehanna Financial Group, LLLP, Research Division

Okay. And then on Daliresp, what are the greatest challenges that you're finding in the launch? You mentioned a few things earlier. But is it more reimbursement or a focusing more on the severe patient population or trying to break into the combo therapy regimen? I'm trying to get a sense of once you get through which of these hurdles will we see the biggest inflection point in the scripts? And then a quick one for Marco. Just on linaclotide, do you have expectations for an advisory panel?

Francis I. Perier

Sure. I think, let's keep in mind with Daliresp. I mean we've got 2 very different products and 2 very different profiles that we’ve launched at the same time. And you can't make direct comparisons between the 2 products and what the script trends look like for the products. With Daliresp, we have a first-in-class novel therapy for the treatment of exacerbations associated with severe COPD. So what that entails is again, the awareness level of this drug before it was launched was below 15% in the market. So first, we had a big awareness campaign to at least get physicians aware that the product turnover is available in the market. And we did a great job of that during the Scientific Launch. Awareness levels are over 80% at this point on a needed basis. But the next challenge is to get physicians comfortable with who are the patients that use this product, when and how. And so there is a significant medical education message that's got to be delivered to the market. Physicians are aware, but now we have to teach them how and when to use the product, and this is clearly a combination-use product. It will be used on top of Spiriva and/or Advair largely. But again, this is a multi-therapy market generally to begin with, particularly when you're in the severe category. And the ease of administration with an oral solid dose formula presentation of the product versus another inhaler really kind of makes that add-on a little bit easier. It's not like you're trying to give a patient a third inhaler, they have to try and learn how to use. So again, it's -- their awareness level is up. We're working very hard on physician education relative to the labeled indication and administration of the product. And we feel very confident that we'll see significant add-on therapy for the drug. We also feel confident that we will get good formulary access for the drug as well. Formulary access is always a challenge in today's market, but we've been able to achieve compelling formulary access in our last 2 launches, and we believe we should be able to do so once again. Marco.

Marco Taglietti

Yes. And as a reminder, Daliresp is not a bronchodilator but provides you immediate benefit in a question of minutes when you take it. Daliresp is a drug that prevents exacerbation over a long time. We are talking really months, years of continuous use and this is what will build the loyalty both for the physician and of the patients as they will see long term, a reduction of exacerbation, a reduction of the use of steroid, a reduction of the number of hospitalization. And I think that, that is really the strength of the product. It's usability to reduce exacerbation. But let me just say, for patients, exacerbations are terrifying. It's just a – I tell you, it is for them is a terrible experience. Now let me go to the second question, which is linaclotide. And linaclotide is a novel mechanism of action. We don't know yet if the FDA will have an Advisory Committee for linaclotide. We will know when we receive the acceptance letter. But we expect to have one because FDA usually when there is a novel mechanism of action tends to have a -- certainly they use their Advisory Committee for the review. So we expect a very high likelihood to have an Advisory Committee for linaclotide.

Operator

Your next question comes from the line of David Risinger.

David Risinger - Morgan Stanley, Research Division

I have a couple of questions. First, with respect to SG&A, Frank, the year-over-year growth this quarter was 23%. Could you just talk to whether there are going to be any Lexapro efficiencies or whether those are -- the Lexapro spending has already been transitioned to Viibryd such that there aren't really any Lexapro efficiencies to come? And then second, just talk about SG&A growth and the outlook after Lexapro goes generic.

Francis I. Perier

Dave, thanks for the question. I think the way to think about SG&A is we guided to an overall SG&A number of about $1.5 billion for the year. In order to get there, we had to have -- and think about it, in order to get there, we had to launch at the Launch Meeting with 3,500 reps in August this quarter, not an inexpensive meeting. In addition, you had all the promotional and sales activities basically for a full quarter of promotion behind 2 launch products. Relative to Lexapro, the Lexapro spending has basically all been harvested out of the P&L, so there's really no additional savings to come through in the future. It's all been redirected towards the launch products and we've been doing that passively over time. Pulling back on the investment of Lexapro over the last couple of years, putting it first behind Bystolic and Savella, and then really taking the remainder and putting it behind Teflaro, Daliresp and Viibryd. But I think we're on track to spend as we guided for the full year.

David Risinger - Morgan Stanley, Research Division

Okay. And then I have a couple questions for Marco, if that's okay. So with respect to Namenda XR, Marco, could you just talk about whether there's any differentiation in terms of efficacy and also whether the launch is planned for late fiscal '12 or late calendar '12? And then separately, there is a new post-marketing study on Viibryd that you've agreed to with the FDA. Could you provide some clarity on that study including the planned doses and relative comparators? I think one of the issues was the FDA wanted more clarity on the efficacy and safety profile of different doses of Viibryd.

Marco Taglietti

Certainly. So let me start with Namenda XR. As we mentioned, the dose is 28 milligrams, so it's a higher dose but it's once a day. So I would say that this is certainly is one of the major differentiation in terms of the product being easier to be administered once a day. In terms of efficacy, clearly shows that adequate and comparable efficacy to the IR product, so this is where we expect to be the strength really of the product is the easier to use in a patient population that is taking already a significant amount of product. The other question on Namenda XR was...

David Risinger - Morgan Stanley, Research Division

The launch timing, whether that's late fiscal '12 or late calendar '12?

Francis I. Perier

Dave, it's very good question because I don't want to get caught up between fiscal and calendar year. So what we were thinking of is late calendar '12 or early calendar '13. And I would also add that one subtle but very important point that differentiated the Namenda XR trials from the Namenda IR trials was that Namenda XR was used on top of any acetylcholinesterase inhibitors, so all comers in the market versus the original Namenda IR trial which were versus Aricept. So that is a significant actual change in the way the clinical protocol was designed. That's why I tried to emphasize in my remarks that it was on top of any acetylcholinesterase inhibitor.

Marco Taglietti

That's a very important point, Frank, I should have mentioned that. Going to Viibryd. Yes, that's actually quite an extensive post approval commitment, which actually we see quite favorably because it has all the strengths, the profile of the product. So starting with one of the major request was to study a lower dose of vilazodone, the 20 milligram. So we have studied potentially starting as we speak to meet these requirement comparing the 20 and the 40 milligram showing that the comparative efficacy of the 2 products. Another request of the agency was the relapse prevention -- relapse prevention study, and so we are starting that study, too. That will be a somewhat longer study. Both studies, both the lower dose and actually the relapse prevention studies are 2 studies that actually would enrich and strengthen our labeling. So we actually were looking forward to get these studies done and to incorporate them in the labeling. As a usual practice for FDA, they have asked also an extensive pediatric program. But very gradually, we are conducting to both assess the efficacy of the product in children but to again, to expand in that area. And there are some other requirements that at this point are just to sort of a check box FDA has asked us to do like expanding our severe hepatic study, asking some drug interaction studies, some characterization of some of the aspects of the product. But these are just minor let's say, early -- activities that we are going to end parallel with the rest of the program.

Francis I. Perier

I think, Dave, suffice it to say that as with all of our products, we have a very robust Phase IV development program with additional studies and additional potential indications behind this product as well as everything else. Just as we've announced this quarter, the new data for Bystolic. You’ve got to keep investing behind the products.

Operator

Your next question comes from the line of David Amsellem.

David Amsellem - Piper Jaffray Companies, Research Division

One on cariprazine. Can you talk about how you think that product is differentiated from existing atypicals? And assuming it does get commercialized, what gives you the sense that the product can do better than what we've seen out of the last 2 brand launches, which are iloperidone and asenapine?

Marco Taglietti

Let me start, first of all, with a characterization. What has been intrigued as, and the major reason why we licensed this drug to start with is really the mechanism of action because everything starts from there. It is to see how the drug would work. And this has been the combination of a D2, D3 modulation. But we expect we'll have actually a positive effect on the profile of the drug both in terms of efficacy and most importantly in terms of tolerability. In our programs, right now are most advanced acute mania and schizophrenia. We are looking at various parameters where we expect to see a benefit both in terms of tolerability and potentially in efficacy and endpoint. I think right now, it's maybe a little too early because we will have to look at actual result although the Phase II study suggested definitely in profile in terms of extrapyramidal symptoms that is certainly favorable compared to the current antipsychotic. The other aspect where we expect be harder to provide a benefit is actually expanding the rate of [indiscernible], going into both bipolar depression and adjuvant [ph] disease and to continue to build the product with good tolerability. We are using in this indication a significantly lower dose than the one we use for example in acute mania and the schizophrenia. So we expect that we'll provide also an advantage in terms of tolerability. And as you may know, tolerability is a big issue with this type of product. So certainly, we are looking into it. We are looking also the type of symptoms both in terms of positive and negative symptoms also a big advantage and so all these are areas that we are watching very, very closely to differentiate the current [indiscernible] product.

David Amsellem - Piper Jaffray Companies, Research Division

Okay. And then a second question, if I may, on levomilnacipran. I guess the question here is how do you see differentiation and maybe it's a little too early to answer this, but how do you see differentiation versus the other dual reuptake inhibitors, Cymbalta and Effexor in particular. And also, I guess how would you position it vis-à-vis Viibryd once that product gets to market?

Marco Taglietti

Well, let's start with the character differentiation. The reason really we licensed this product is based on the Phase II data. Phase II data, you may have seen that been published, very, very exciting. Very high response, very high level of efficacy. We were sort of a little disappointed as probably many people when they first studied and showed that level of results. But the second study confirmed right on the spot, the same efficacy that we have seen in the Phase II. So we think that efficacy from levomilnacipran will be a major characterization. In terms of tolerability as you know it’s in an [indiscernible] so we selected the [indiscernible] and as always, [indiscernible]. So it’s the royal “We” [indiscernible], with what we expect to be a more favorable tolerability both in terms of cardiovascular tolerability and other GI tolerability. So we expect that this product, and of course, the Phase III will actually tell us if our [indiscernible] on us remain.

Francis I. Perier

And I think from a commercial positioning standpoint, there is clearly within this market, I mean, you’ve got over 200 million prescriptions written a year for antidepressants, across the range of antidepressants including Wellbutrin. And so we clearly see the opportunity to position 2 antidepressants at 2 different points for 2 different patient sets in the market. Patients tend to evolve through products in the market today depending upon what their specific symptom set is. And often, kind of matriculate up to the dual mechanism SNRI agents. And as Marco indicated, we think we've got the potential for a new drug in that class with very -- the potential for very impressive clinical efficacy in terms of change in MADRS score as well as a class-like tolerability. So we clearly see the opportunity to position 2 different products for 2 different patient sets in the market. And there's -- the market is big enough to have 2 new agents within the next couple-of-year time frame.

Operator

Your next question comes from the line of John Boris.

John T. Boris - Citigroup Inc, Research Division

First question just on Daliresp. Marco, can you remind us from the clinicals what the rate of GI intolerability was from the clinical trials and are you hearing or seeing any issues related to GI post-launch? And then I have a follow-up question on Namenda.

Marco Taglietti

In terms of tolerability, the rate was in the low teens and both in terms of especially now, I think was be the major one. But let me stress that what we saw in the clinical trials was that these effects tend to subside -- to decrease in 2 to 4 weeks depending on the patient. So what we expect is probably to have in the market a similar situation of patients, physician are well informed about these events. So you have patients that at the beginning may experience, let's say probably 10%, 15% of patients experiencing some nausea going through it and actually [indiscernible] no problem further. So this was what we observed in these clinical trials and I think that's what will happen in the market. And so far doesn’t seem to be the major, I'm going to say, show stopper of concern for the commercialization of the product.

Francis I. Perier

Yes, I think the physician feedback that we're getting through market research is that really the product’s performing very consistent with its label, which is exactly what we want it to do. And in terms of diarrhea that was reported in trials, again as Marco said, it was generally mild to moderate and resolved itself over a very short period of time. And I think what we're seeing in the physician feedback that's coming back is that we're really getting no complaints about the GI or the diarrhea kind of aspects of the product.

John T. Boris - Citigroup Inc, Research Division

That's great. Just switching back to Namenda, Frank, I guess from an investment standpoint, I know you've mentioned that you've pulled back on the investment on Lexapro certainly reallocating that resources like with the new product launches. But can you maybe just articulate that when a major player exits the market like the Aricept competitors have, sometimes your peers may increase investment and may see an opportunity to increase utilization but we're obviously seeing a different kind of trend here. Are you still putting the same level of investment that you did last year behind Namenda, and are you still sampling the product pretty heavily?

Francis I. Perier

We're still putting a significant level of investment behind Namenda, but it's not at the levels that we were at in the prior years. And that's because again, it's a maturing product in a maturing category and it's well positioned in the category. So Namenda is about 35% share of the category today like grown on a -- it continues to grow its share on a year-over-year basis. But again, it's a -- over 60% of Namenda's use is in combination with an acetylcholinesterase inhibitor, principally Aricept. So we continue, we think, to invest wisely to maximize Namenda's potential within the Alzheimer's category. But that has provided us with the ability to generate some incremental investment for the new products and particularly the launch products.

Francis I. Perier

And we also have been using Namenda as a proving ground to experiment with some other means of getting in touch with physicians such as e-sampling, new personnel, et cetera. And we've also moved a lot of details from PI physicians to PII and PIII. And again, you get the benefit of, you get the familiarity with the -- recalls the physician when you walk into the office. They know the product, they like the product, they see the rep, they get their sample and that may be all the information that a lot of primary care doctors need about Namenda at this stage in its lifecycle. So it's getting attention, just not the level of attention that it's gotten in the past.

Operator

Your final question comes from the line of Greg Fraser.

Gregory D. Fraser - BofA Merrill Lynch, Research Division

On SG&A, we had been thinking about 2Q as a high point for the year given the big Launch Meeting in August and spending behind Daliresp and Viibryd. Based on your comments, it sounds like spending could be closer to the 2Q level going forward. Is that the right way to think about SG&A for the back half of the year?

Francis I. Perier

I think the way to think about it is that SG&A spend will be pretty much the same for the next couple of quarters as it was in the current quarter. Again, it's a big quarter, both the scientific launches and the full product launches underway but there's big investment that has yet to be made behind those products to get them on the TRx trends that you all want to see and that we want to see as well. So there's big investment yet to come, but we think that we're very comfortable with where we are with both product launches at this stage and that we think we're off to a very good start.

Gregory D. Fraser - BofA Merrill Lynch, Research Division

Okay. And on Daliresp, are you seeing resistance from some prescribers that you think will be difficult to overcome with the current data set and label? And then outside of your post-approval commitments, what other studies are you planning to conduct for Daliresp?

Francis I. Perier

We're not getting any specific pushback from physicians on Daliresp. I think the 17% improvement. And once physicians understand what that means in that when am I going to recognize a benefit from a patient? And I'll see a benefit in every 4 or 5 patients that I put on this product and the benefit is seen over the long term. This is not a bronchodilator, so you're not getting an immediate benefit in bronchodilation by administering the product. What you're seeing, as Marco indicated earlier, is that over time that patients will present fewer exacerbations -- within any physician’s practice, a reduction in exacerbations and what that will -- and how that will characterize itself is fewer hospital visits and less use of steroids in these very, very critical and sick patients. Does that answer...

Gregory D. Fraser - BofA Merrill Lynch, Research Division

Yes, and then the other question is what other studies are you planning to conduct other than the post-approval commitments?

Francis I. Perier

Yes, I mean we -- just suffice it to say that with all of our products, we have a robust Phase IV program that we will deploy over time to help support the product's label and Daliresp is no exception to that.

Marco Taglietti

And actually for Daliresp, we have a clear Phase IV post-approval commitment to which, again, similar to Viibryd, we actually, we're looking forward to completing because it will expand the labeling. And this is the exploration of the use of Daliresp on top of the combination of LABA inhaled corticosteroid. We actually been -- we just started the study. It's a large study, 2,300 patients in over probably 300 sites. And one point is that actually there's been a great interest. We actually had an investigator meeting last week. The great interest of the investigator. So really continue to explore this product, there is a great excitement. There's been great excitement among the physicians. They want to see this product. They want to see how it works on top of Advair or Symbicort. And I think that the result of this study will once again confirm the use of this product in the polytherapy treatment of these patients.

Frank J. Murdolo

Okay. Thank you, Marco, and thank you, everyone, for joining us this morning. Operator, that will end our call for now. Thank you.

Operator

Thank you, ladies and gentlemen, for your participation. You may now disconnect.

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