Icahn Challenges Forest Labs Decisions in Letter
From Associated Press (July 2, 2012)
NEW YORK -- Billionaire investor Carl Icahn said Monday that the board of Forest Laboratories Inc. is putting the interests of Chairman and CEO Howard Solomon ahead of the interest of the drug maker’s shareholders.
In a letter filed with the Securities and Exchange Commission, Icahn said Solomon has sold large amounts of stock over the years, and those sales amount to "a savvy bet against the prospects of a company" as Forest prepared for its billion-selling antidepressant Lexapro to lose patent protection. Generic versions of Lexapro reached the market earlier in 2012, causing sales of the branded version to drop sharply.
The New York drug maker said Icahn’s comments "do not serve any useful purpose." Forest Labs said it listens to suggestions from shareholders and again encouraged shareholders to vote for its candidates instead of those nominated by Icahn.
According to FactSet, Howard Solomon owns 1.1 million shares of Forest, or a stake of 0.4 percent in the company. Icahn and his funds own a 9.9-percent stake.
Icahn said Friday that he was suing Forest, seeking documents related to Forest’s profit guidance, licensing deals for some of its products, and its plans for Howard Solomon’s eventual successor. Solomon has been the company’s CEO since 1977, and Icahn has suggested the company is grooming Howard Solomon’s son David to be his replacement. David Solomon has worked at Forest since 2001 and became a senior executive in January 2011.
Icahn has nominated four director candidates to serve on Forest’s board. He did the same in 2011, although shareholders ultimately voted Forest’s own candidates to the board.
In June, Forest cut its annual profit forecast because sales of brand-name Lexapro were less than it expected, and prices for the company-authorized generic version were lower than expected because of stiff competition. The company’s other top-selling product, the Alzheimer’s disease drug Namenda, will also lose patent protection within a few years.
The company launched three new drugs in 2011: the lung disease drug, Daliresp, the antidepressant Viibryd, and the anti-infection drug Teflaro.
Shares of Forest Labs rose 80 cents, or 2.3 percent, to $35.79 Monday.
Posted: July 2012