Forest Laboratories said it has acquired Cerexa, a venture-backed biopharmaceutical company in Alameda, Calif., for $480 million. It will pay $100 million more if certain milestones are met.

That’s a quick buy for Cerexa, which was spun out of another company, Peninsula Pharmaceuticals in August 2005.

It is not clear how much money investors made. A group of investors gave $50 million to Cerexa after the spin-out, but presumably Cerexa already carried some worth, and so investors owned only a portion of the company. New Leaf Venture Partners and Frazier Healthcare Ventures led that round, which also included Canaan Partners, Domain Associates, EGS Healthcares, Montreux Equity Partners, OrbiMed Advisors, Pappas Ventures and Sears Capital Management.

Cerexa spun off from Peninsula Pharmaceuticals when that company was sold to Johnson & Johnson earlier in 2005.

Forest will now own rights to two Cerexa’s two “injectable” antibiotics and an option to a third. According to the company’s statement, Cerexa’s lead compound, ceftaroline acetate, is entering Phase III studies. It describes it as follows:

[It is] a cephalosporin antibiotic that exhibits bactericidal activity against the most resistant strains of Gram- positive bacteria, including MRSA (methicillin resistant Staphylococcus aureus) as demonstrated in a completed Phase II comparative trial in patients with complicated skin and skin structure infections (cSSSI). Ceftaroline has also demonstrated bactericidal activity against penicillin-resistant Streptococcus pneumoniae (PRSP) and common gram-negative bacteria. Ceftaroline is being developed for initial indications of cSSSI and community acquired pneumonia (CAP).

Phase III studies for cSSSI are planned to begin in the first quarter of calendar 2007 while the CAP Phase III program is scheduled to begin in the second quarter of calendar 2007. In March 2006 the U.S. Food and Drug Administration (FDA) granted ceftaroline Fast Track designation for the treatment of cSSSI caused by MRSA. In granting this designation, the FDA noted that ceftaroline has the potential to address an unmet medical need due to its potential ability to benefit patients who are unresponsive to existing therapies or who are unable to tolerate existing therapies due to serious toxicities that are present in such therapies. If the Phase III studies are successful and Forest receives FDA marketing approval, Forest plans to launch ceftaroline with these two initial, cSSSI and CAP indications in the 2010 or 2011 timeframe. Additional indications will also be pursued under future supplemental filings.

As a hospital-based product Forest would detail the product utilizing its existing hospital based salesforce, a subset of the Company’s total salesforce. Forest will also explore options for commercialization outside the U.S. (excluding Japan) including but not limited to out-licensing marketing rights or acquiring a non-U.S. hospital-based salesforce.

The company said the U.S. market for injectable antibiotics is currently estimated to be between $5 billion and $7 billion, using branded pricing for all products. Worldwide, the market is estimated to be over $9 billion.