Jefferies & Co.’s Weekly Rx Update (FRX, MRX, IPXL)

Jefferies and Company is out with its weekly prescription drug update today. It highlights 1) Forest's Namenda market share strength and likely Q2 upside; 2) Medicis' Solodyn & Ziana still ripping and also likely to deliver a Q2 beat of estimates; and 3) Impax's generic Adderall XR still trying to stabilize. 1. Namenda by Forest Labs

: “We haven't highlighted Namenda in a long time, but with Forest reporting tomorrow and investor focus moving beyond Lexapro, we thought it topical to look at Namenda as it will be the largest cash-flow driver immediately post-Lexapro genericization. Namenda performance has actually been stronger than expected lately, with a surprise jump in market share over the last few months. Namenda TRx share climbed almost 50 basis points from 34.4% in Q1 to almost 35% in Q2 – an all time high. In terms of sales that could imply strong Q2 sales of >$310M vs. consensus of $298M. We assume ~$6M inventory de-stock this quarter, but that might not happen with strong Rx demand through the end of the quarter. Importantly, with the total Alzheimer's y/y market growth still consistent with our ~3% projection, and share running ahead there could be room for solid Namenda upside going forward. This week, Namenda was down 5.1% to 144,471 TRx, but share remains ~34.9% and the AD market adjusted y/y volume was a solid 3.3%.” 2. Solodyn & Ziana by Medicis Pharmaceutical

: “Medicis' acne products continue to show robust demand growth. While Solodyn and Ziana were hit hard this week by the holiday – down 12% and 19.8%, respectively – both have strong y/y growth trends and are shaping up to beat Q2 estimates. Adjusted for an approx. 12% y/y downward skew this week, Solodyn y/y growth was >19% and was >27% in Q2 overall; not bad 4 years post launch. Ziana adjusted y/y growth was an even stronger ~32%, continuing the impressive mid-30% growth the last two quarters. Assuming the expected value/Rx (average selling price) for Solodyn is in the projected $295-305 range, Q2 sales should post $4-7M upside to the consensus $95M estimate (we expect the high side). Ziana could post another ~$2M upside to the $15.5M consensus.” 3. Adderall XR Generics by Impax Laboratories

: “We're still waiting for Impax's generic Adderall XR share to stabilize. After our last update (data through 6/18), Impax's proceeded to lose meaningful share two weeks in a row (dropping 120 and 200 basis points). It ticked back up 30bps to 23.3% molecule share this week, but we'll need to see substantial increases in share and/or total generic erosion overall (to increase the size of the pie) in order to hit our future estimates. As it stands now, it seems DEA quota and the Shire supply bottleneck may not improve unless Impax takes more aggressive action (perhaps legal, similarly to Teva's previous action against Shire).”