Forest Labs Earnings Call INSIGHTS: Effective Tax Rate, Trial Talk
Effective Tax Rate
Tim Chiang – CRT Capital: (indiscernible) being potentially lower for fiscal ’13. I think you said 23%. I think last quarter you said it was around 26%, I just wanted clarify that?
Francis I. Perier, Jr. – SVP, Finance and CFO: Tim I am sorry you got cut off in the very beginning of the question. I believe it was about the effective tax rate, is that correct?
Tim Chiang – CRT Capital: Yeah, sorry about that.
Francis I. Perier, Jr. – SVP, Finance and CFO: The one area we just want to clarify we have done some more work on phasing out the year considering the changes that we have had to consider with regard to Lexapro etcetera and we see that rate now for a full fiscal year at about 23%.
A Closer Look: Forest Labs Earnings Cheat Sheet>>
Tim Chiang – CRT Capital: Okay, and I think one off just one quick follow-up to that, Franc. I think last quarter you mentioned that the bulk of your earnings for this fiscal year would rest in the fiscal first quarter and the fiscal fourth quarter, is that still the case for your guys?
Francis I. Perier, Jr. – SVP, Finance and CFO: That is absolutely the case, Tim. Given the changing guidance because of Lexapro, the fiscal fourth quarter has even more impact than the first quarter.
Corey Davis – Jefferies: I have two, first probably for Marco, I think, Ironwood mentioned in their press release this morning that they are doing a new Phase IIIb study to further characterize the effect of linaclotide on abdominal symptoms in CC. So my question is, can you elaborate more on the purpose of that trial? Would it eventually need to lead to a new indication or just a label change or is it more intended to be just a publication?
Dr. Marco Taglietti – SVP, Research and Development and President, Forest Research Institute, Inc.: So let me, first of all, if that were – it’s both, not just Ironwood, together (Ironwood) and Forest as part of our strategy in general when we launch a product to start to do Phase IIIb studies. Turning to other mix of studies both, trying to understand and position the product, so studies that we can use for promotion and so studies that (we be in) labeling; studies that can change the labeling and studies, as you mentioned, that can be for publication. This belong to the first class I just mentioned, but in other words this is a Phase IIIb studies on which we want really to show how this product provide an advantage in certain type of symptoms associated with chronic constipation. So symptoms like bloating some of a discomfort that patients have. In our Phase III studies we had clearly showed a benefit in this symptoms, but as part of the secondary point this study will be a study within the labeling so to be used for promotion not just for publication to show the type of benefit that this – that linaclotide can provide compared especially to products on the OTC that do not have this type of effect. So, I think, it is just part of our strategy to make sure that as the product is launched we continue to provide new data that can continue to better define the profile of the drugs.
Corey Davis – Jefferies: Just to clear up any potential controversy. This is not something that the FDA suggested you might need to do pre-approval first round, this is something clearly…?
Dr. Marco Taglietti – SVP, Research and Development and President, Forest Research Institute, Inc.: No, not at all. So, this is a study that we just see as a study that we provide when the product is launched and on the market will provide. Again, some additional I can say color to the labeling and to the type of effect that the drug has.
Elaine Hochberg – EVP and Chief Commercial Officer: This is Elaine. Marco, I think, handled that answer very well, but as you may recall from Investor Day we do believe in elucidating our molecules through time for additional studies. You also know that probably chronic constipation is the part of the market that we are going to have to move I think with lots of true sources about the additional benefit that linaclotide carries versus the OTC (lack to do). So, this is our first foray beyond the different clinical to begin to continually address the molecule appropriately with the data needed to persuade both the doctors, the payers and individual patients to come back into the RX world to get the benefit of linaclotide not allowed to them.
Dr. Marco Taglietti – SVP, Research and Development and President, Forest Research Institute, Inc.: In fact that’s really – if I can add on what the Elaine just mentioned, for example, some of the success of Bystolic certainly has been due to the fact that since we launched the product, we have conducted almost a dozen of the Phase IIIb studies. All or most of them usable in promotion again to characterize the profile and to better understand in which setting a physician can use the drug. So Phase IIIb is something that the commercial group and they are in the organization are working very closely to make sure that we continue to characterize the profile of the product.
Corey Davis – Jefferies: My second question for Franc. Can you quantify the amortization, in which line item it came out of and if you are going to break that out as a separate line item, so we can develop better non-GAAP EPS projection to the official estimates?
Francis I. Perier, Jr. – SVP, Finance and CFO: We have got two places as an amortization coming out. Cost of sales and G&A, and overall, it’s about $0.32 for the year that – or $0.30 for the year that’s pretty evenly spread throughout the year. So you can almost do like $0.07 to $0.075 each quarter.
Corey Davis – Jefferies: What’s the pre-tax absolute dollar figure associated with that. Is that taxed at the same corporate rate?
Francis I. Perier, Jr. – SVP, Finance and CFO: You just used the same overall effective rate Corey.