Forest Laboratories, Inc. (NYSE: FRX) (“Forest”) today announced
that it has filed definitive proxy materials with the Securities
and Exchange Commission (SEC) in connection with its 2011 Annual
Meeting of Shareholders, which will be held on August 18, 2011.
Forest shareholders of record as of the close of business on June
24, 2011 are entitled to vote at the 2011 Annual Meeting.
The Board of Directors of Forest has also sent a letter to its
shareholders outlining Forest’s long history of strong execution
and delivering shareholder value. The letter urges shareholders to
vote for Forest’s strong slate of nominees, which includes seven
incumbent directors and three new, highly qualified candidates.
For information about Forest’s 2011 Annual Meeting of
Shareholders, please visit: www.FRX2011annualmeeting.com.
The text of the letter follows:
July 18, 2011
Dear Fellow Shareholders,
The Board of Directors and senior management of Forest
Laboratories, Inc. are committed to moving your company forward
with one clear priority: delivering value for our shareholders.
Forest Has a Long History of Strong
Execution and Delivering Shareholder Value, and a New Pipeline to
Build Value in the Future
Forest’s track record of developing new products is one of the
strongest in the industry. Over the last 10 years, Forest has
received seven novel drug approvals, including four in the last
five years, outpacing not only its specialty pharmaceutical peers
but also some of the world’s largest global pharmaceutical
companies.
- In just the past 38 months, Forest has
obtained five product approvals from five different divisions of
the FDA and has launched Bystolic, Savella, Teflaro, Daliresp and
Viibryd.
- This year, we filed an NDA for
aclidinium and will shortly file another for linaclotide.
- Through this year’s acquisition of
Clinical Data, we gained Viibryd, an exciting ready-to-launch
product that returns Forest to the depression category, where the
Company has long-standing expertise and had great success.
- Today, the Company announced very
positive preliminary top-line results from a Phase III study of
levomilnacipran for the treatment of adults with major depressive
disorder. A statistically significant improvement was achieved for
levomilnacipran treated patients for all dose groups compared to
placebo, a significant milestone in the ongoing development program
for levomilnacipran.
In total, Forest has nine new products launching between 2008
and 2013 and six additional products in the Phase II/III pipeline
expected to launch after 2014.
As detailed in the chart below, this strong execution has helped
drive outsized shareholder returns:
[CHART OMITTED]
- Forest share price performance has
exceeded that of the S&P 500 over both short (one-year and
three-year) and long (20-year) time periods and has outperformed
the AMEX Pharmaceutical Index (DRG) over both one-year and
five-year time periods.
- In the first six months of 2011, Forest
shares have gained approximately 23% compared to a 5% gain in the
S&P 500.
- Since 2005, the Company has returned
$4.4 billion in capital to shareholders through repurchases.
- Over the last 10 years, Forest has
increased revenue at a compound annual growth rate of 12.1% and
grown earnings per share (EPS) at a compound annual growth rate of
16.5%.
[CHARTS OMITTED]
We are proud of what we have achieved and are working diligently
to ensure that we continue to grow and deliver shareholder returns
in the years ahead.
2011: A Year of Strong Performance
and Shareholder Returns
In fiscal 2011, we delivered very solid performance, growing net
revenues by 8%, operating income by 41% and net income by 53%. The
Company achieved these results notwithstanding increasing pricing
pressures and emerging healthcare austerity measures.
Namenda continues to be a main driver of performance with
continued strong growth. In addition, Lexapro also performed well
and, along with its predecessor Celexa (citalopram), now accounts
for just under one-third of antidepressant prescriptions in a
market filled with generic competitors. Importantly, Bystolic,
Savella, Teflaro, Viibryd and Daliresp, key long-term profit
contributors, were launched successfully:
- Sales of Bystolic, a vasodilating
beta-blocker, were $264 million in fiscal 2011, and after three
years on the market, it is still growing at a rate of over
30%.
- Savella, for fibromyalgia, had sales of
$90 million in fiscal 2011 and is also growing at the rate of
30%.
- Over 1,300 hospitals have already tried
Teflaro, and we expect it to be a widely used hospital
antibiotic.
- Daliresp was approved by the FDA in
February as a treatment to reduce the risk of chronic obstructive
pulmonary disease (COPD) exacerbations in patients with severe
COPD. The COPD market is currently valued at approximately $5.5
billion.
- Viibryd, which we purchased in April,
treats depression in adults and has a favorable tolerability
profile. We are optimistic about its prospects in this competitive
market.
- The Company also successfully advanced
all of its pipeline products to the next stage of clinical
development.
The strength of our business and balance sheet has enabled us to
devote significant capital to business development opportunities
while also regularly returning capital to our shareholders. In just
the past year, the Company has repurchased over $1 billion in stock
through accelerated share repurchase programs. In addition, the
Company has an open authorization to repurchase up to an additional
27.0 million shares. Going forward, the Company has the capital to
fund additional new business opportunities and execute additional
share repurchases, as warranted.
Forest Has a Robust Late-Stage Pipeline,
Including Our Highly Anticipated“Next Nine” Products
Due to our success building the Lexapro and Namenda franchises,
we now are at an important juncture for the Company transitioning
beyond these products. Forest is not unique in facing patent cliffs
– they are a fact of life in our industry and all pharmaceutical
companies have to prepare for them. Your Board and management team
have been proactive in planning for this loss of exclusivity over
many years and have already made significant progress in creating a
robust pipeline that is already delivering significant value and
has the potential to deliver even greater value both in the near
and long-term, with patent protection expiring after 2020.
A total of nine new products have been launched or are expected
to be launched by 2013. This includes two products launched in 2009
– Bystolic and Savella – and three additional products launched in
just the last six months: Teflaro, Daliresp and Viibryd. In
addition, the Company expects four new launches by 2013 and has six
additional products in Phase II or later that are expected to
mature in 2014 and beyond. We are very excited about these new
products and expect them to drive growth and diversify revenue over
the long term.
Importantly, our business development activities, which to date
have produced all of the products in our pipeline, are ongoing. We
are continuing to screen a wealth of opportunities in the
market.
Ultimately, products are the root of any pharmaceutical
company’s success. Our product development and commercialization
achievements, based on the sustained execution of our strategic
plan, have enabled us to surpass the productivity of even the
largest pharmaceutical companies.
Your Experienced Board is Committed to
Getting the Job Done
Your Board is composed of experienced, independent healthcare
industry, legal and financial experts and has continued to evolve
to respond to the current environment. Forest is committed to
maintaining a strong and independent Board to oversee management
and corporate affairs, and is determined to ensure that the Company
is well-positioned to execute its strategy and deliver value to
shareholders.
In the past five years, Forest has added two new independent
directors to its Board: Dr. Nesli J. Basgoz, the Associate Chief
for Clinical Affairs, Division of Infectious Diseases at
Massachusetts General Hospital, joined in 2006 and Dr. Peter J.
Zimetbaum, a Director of Clinical Cardiology at Beth Israel
Deaconess Medical Center and an Associate Professor of Medicine at
Harvard Medical School, joined in 2009. Both of these candidates
have brought valuable medical experience in distinct and critical
therapeutic areas.
This year, we have nominated three new highly experienced,
independent directors and seven incumbent directors for election at
this year’s Annual Meeting. Our new nominees – Messrs. Christopher
J. Coughlin, Gerald M. Lieberman and Brenton L. Saunders – are
highly accomplished professionals who, along with Forest’s seven
incumbent directors, bring the critical perspective, financial
acumen, operational skills, investor perspective and corporate
governance experience that will be instrumental to our future
growth and success as we focus on building and delivering value for
all shareholders:
- Mr. Coughlin was the Chief
Financial Officer and Executive Vice President of Tyco
International from 2005 to 2010 and remains an advisor to the
Company. He has held a wide array of senior management positions,
has a pharmaceutical background, and brings significant finance
experience and compliance and corporate governance expertise. Among
other things, Mr. Coughlin served as the Chief Financial Officer of
Pharmacia from 1998 to 2003. He is currently serving as the lead
independent director of Dun & Bradstreet, where he is a member
of the Audit Committee and the Compensation and Benefits Committee,
and he also serves on the board of Covidien plc, where he is the
chair of its Compliance Committee.A veteran of service and
leadership on public company boards, Mr. Coughlin’s wide array of
senior management positions in global companies, pharmaceutical
background, finance experience and compliance and governance
expertise will further equip the Board in making strategic
decisions for the long-term growth of the Company.
- Mr. Lieberman was most recently
President and Chief Operating Officer of AllianceBernstein from
2004 to 2009, where he served since 1998. He brings an investment
perspective and deep experience in finance, accounting and risk
management. Among other things, Mr. Lieberman held a number of
senior positions at Fidelity Investments from 1993 to 1998,
including Chief Financial Officer and Chief of Administration, and
was a member of Fidelity’s operating committee, reporting directly
to the Chairman. Before joining Fidelity, Mr. Lieberman spent 14
years with Citicorp, where he served as Senior Human Resources
Officer and a member of the policy committee, reporting to the
Company’s Chairman and Chief Executive Officer.Mr. Lieberman’s
senior roles at AllianceBernstein and Fidelity Investments, premier
investment and asset management firms, and his breadth and depth of
experiences, including his finance and accounting expertise and
career-long focus on risk management, enable him to provide
important and valuable perspectives to the Board.
- Mr. Saunders has been the Chief
Executive Officer of Bausch + Lomb since March 2010. He brings
operational experience as CEO of a global, branded healthcare
company, as well as deep healthcare and pharmaceutical experience.
Among other things, Mr. Saunders served as a senior executive with
Schering-Plough from 2003 to 2010, most recently as President of
Global Consumer Health Care. He also served as the Chief Risk
Officer at Coventry Health Care between 1998 and 1999.Given Mr.
Saunders’ leadership experience as CEO of a global, branded
healthcare company and deep pharmaceutical experiences, he will be
an invaluable addition to the Board. In addition to his other
attributes, his 15 years of senior compliance experience and broad
regulatory expertise at a number of different companies, including
Bausch + Lomb and Schering-Plough, will prove particularly
valuable.
The full biographies of the three new candidates are contained
in our proxy materials. William Candee and George Cohan will not be
standing for re-election, and on behalf of the entire company, we
would like to express our deepest appreciation and respect for
their many contributions to Forest over the years.
YOUR BOARD UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE FOR OUR FULL SLATE OF 10 HIGHLY QUALIFIED
DIRECTORS AT THE ANNUAL MEETING
Your Board rigorously and continuously analyzes Forest’s
business plan in light of the competitive landscape and regularly
reviews all of the strategic options for positioning Forest to
create the greatest value for shareholders. We firmly believe that
Forest’s current strategic plan provides a unique opportunity to
deliver significant value to shareholders. Moreover, our balance
sheet is strong, and we are leveraging this flexibility to generate
returns for shareholders.
Icahn’s Nominees Should be Rejected
Many of you may have heard or read about efforts by Mr. Carl
Icahn, a shareholder who owns approximately 7% of Forest shares, to
elect four hand-picked candidates to our Board. Forest’s Board has
carefully reviewed and considered Mr. Icahn’s nominees, and based
on that analysis, we have concluded that his four candidates are
far less qualified than our slate. Importantly, Mr. Icahn’s
nominees bring no operational experience whatsoever, and two of his
candidates are hopelessly conflicted by their current service as
Icahn-designees on the boards of biotech companies with which we
will likely compete for product opportunities.
Mr. Icahn has offered no plan or strategy for the Company that
would justify installing his four hand-picked nominees to our
board. Instead, he has offered baseless criticism of the Board’s
handling of the federal investigation into the Company’s marketing
practices and its resolution. Over the course of the entire
investigation, the Board has been closely involved in evaluating
and addressing these issues as they have developed, and it
continues to stand behind the Company’s decision to support the
challenge to the potential exclusion action by the Department of
Health & Human Services, Office of Inspector General.
Our Promise to Shareholders
We welcome opportunities to engage in constructive dialogue with
shareholders, and our Board and management team appreciates the
public and private support for our strategy that we have received
from our shareholders. We will work hard to ensure that we continue
to earn your support.
Your Board and senior management team are confident that we are
on the right course to deliver a highly attractive return and
enduring value for our shareholders. You should be assured that we
will continue to re-evaluate our strategy and progress against that
ultimate objective. If we are able to manage and grow our business,
realize our pipeline opportunities, and allocate our capital
prudently, we will be rewarded in the marketplace.
Your Vote is Important – Please Submit the
WHITE Proxy Card Today
Our upcoming Annual Meeting on August 18, 2011 is an important
event in shaping Forest’s future. Forest’s Board unanimously
recommends that you vote for all of our highly qualified director
nominees on the WHITE proxy card. You may vote by telephone,
internet or by signing, dating and returning the enclosed WHITE
proxy card in the postage-paid envelope. We also urge you to
discard any gold proxy card sent to you by Mr. Icahn or his
affiliates.
On behalf of the board of directors, we thank you for your
continued support of our Company.
Sincerely,
/s/
Howard SolomonChairman of the Board and Chief Executive
Officer
/s/
Kenneth E. GoodmanPresiding Independent Director
Forward Looking Information
Except for the historical information contained herein, this
document contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. These
statements involve a number of risks and uncertainties, including
the difficulty of predicting FDA approvals, the acceptance and
demand for new pharmaceutical products, the impact of competitive
products and pricing, the timely development and launch of new
products, changes in laws and regulations affecting the healthcare
industry and the risk factors listed from time to time in Forest
Laboratories’ Annual Reports on Form 10-K (including the Annual
Report on Form 10-K for the fiscal year ended March 31, 2011),
Quarterly Reports on Form 10-Q, and any subsequent SEC filings.
Important Additional Information
Forest Laboratories, its directors, director nominees and
certain of its executive officers may be deemed to be participants
in the solicitation of proxies from Forest shareholders in
connection with the matters to be considered at Forest
Laboratories’ 2011 Annual Meeting. On July 18, 2011, Forest
Laboratories filed its definitive proxy statement (as it may be
amended, the “Proxy Statement”) with the U.S. Securities and
Exchange Commission (the “SEC”) in connection with such
solicitation of proxies from Forest shareholders. FOREST
SHAREHOLDERS ARE STRONGLY ENCOURAGED TO READ THE PROXY STATEMENT
AND ACCOMPANYING PROXY CARD AS THEY CONTAIN IMPORTANT
INFORMATION. Detailed information regarding the identity of
participants, and their direct or indirect interests, by security
holdings or otherwise, is set forth in the Proxy Statement,
including Appendix B thereto. Shareholders can obtain the Proxy
Statement, any amendments or supplements to the Proxy Statement and
other documents filed by Forest Laboratories with the SEC for no
charge at the SEC’s website at www.sec.gov. Copies are also
available at no charge at Forest Laboratories’ website at
www.frx.com or by writing to Forest Laboratories at 909 Third
Avenue, New York, New York 10022.
If you have any questions, require
assistance with voting your WHITE proxy card,
or need additional copies of the proxy
materials, please contact:
MacKenzie Partners, Inc.
105 Madison Avenue New York, NY 10016
frxproxy@mackenziepartners.com
(212) 929-5500 (Call Collect) Or TOLL-FREE (800) 322-2885
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