Forest Laboratories, Inc. (NYSE: FRX) today announced that it
has filed definitive proxy materials with the Securities and
Exchange Commission (SEC) in connection with its 2012 Annual
Meeting of Shareholders, which will be held on August 15, 2012.
Forest stockholders of record at the close of business on June 25,
2012 may vote at the 2012 Annual Meeting.
The Board of Directors of Forest has also sent a letter to its
shareholders outlining Forest’s strong product portfolio and
commitment to corporate governance. The letter urges shareholders
to vote for Forest’s highly qualified, experienced and diverse
slate of nominees.
For information about Forest’s 2012 Annual Meeting of
Shareholders, please visit: www.FRX2012annualmeeting.com.
The text of the letter follows:
July 9, 2012
Dear Fellow Shareholders,
Forest Laboratories, Inc.’s Annual Meeting of Shareholders will
be held on August 15, 2012. This meeting comes at an important
point for the future strategic direction of the Company, and our
shareholders will face a key decision. Once again, Carl Icahn has
nominated four individuals to the Forest Board – nominees we
believe would not serve the interests of all shareholders. We
strongly believe that Forest’s director nominees have the right
experience, expertise, and insight to drive sustainable growth at
Forest in 2012 and beyond.
Now is a very exciting time for Forest as we undergo a
significant transition in our therapeutic portfolio, and we take
pride in the progress we have made since our last Annual Meeting.
Last year, we made a commitment to advance our late-stage pipeline,
grow and diversify our product portfolio, and further enhance our
corporate governance practices. We have done all of those things,
and we continue to work to realize the full potential of our
launched products, grow our company, and build value for our
shareholders.
FOREST HAS CONTINUED TO ADVANCE ITS STRONG
PRODUCTPORTFOLIO OVER THE PAST YEAR
Forest’s Board and leadership team are focused on building
sustainable value for shareholders through the advancement of our
product pipeline. As we promised you, Forest has made considerable
progress toward the introduction of new products since our 2011
Annual Meeting last August. Reflecting the hard work begun years
ago to identify, develop and bring to market new products, we
launched Bystolic in 2008 and Savella in 2009. Building on this
momentum, in 2011, we launched Teflaro, Daliresp and Viibryd. This
past year, we also:
- Filed a New Drug Application (NDA) with
the U.S. Food and Drug Administration (FDA) for aclidinium,
for the treatment of chronic obstructive pulmonary disease;
- Filed an NDA for linaclotide, a
novel therapy for the treatment of constipation-predominant
irritable bowel syndrome and chronic constipation;
- Announced positive results from the
completed Phase III clinical program for levomilnacipran, an
investigational agent for the treatment of adults with major
depressive disorder, and announced that a 2012 NDA filing is being
prepared;
- Announced positive results from the
completed Phase III program for cariprazine, an
investigational antipsychotic agent for the treatment of adult
patients with schizophrenia or acute mania associated with bipolar
I disorder, and announced that a 2012 NDA filing is being
prepared;
- Enhanced the value of our product
franchise by making significant progress on lifecycle programs,
including beginning Phase III studies for
aclidinium-formoterol (September 2011),
ceftazidime-avibactam (December 2011)
Bystolic-valsartan (January 2012), and preparing to launch
Namenda XR (2013);
- Received marketing approval from the
European Medicines Agency (EMA) for Colobreathe dry powder
inhaler for the treatment of cystic fibrosis and chronic lung
infections; and
- Secured the right to acquire
BC-3781, a novel antibacterial agent, from Nabriva
Therapeutics.
Over the last five years, Forest has received six product
approvals in nine different indications. We expect the number of
approvals to grow to eight with the aclidinium approval expected in
July 2012 and the linaclotide approval expected in the third
quarter of calendar 2012. We also expect to file NDAs for
levomilnacipran and cariprazine later this calendar year.
Forest's track record of new product development compares
favorably to its specialty-pharma peers, as well as many of the
industry’s largest companies. For example, Forest has had more new
molecular entity approvals and new drug application (NDA)/BLA
filings over the last three years than similarly-sized companies
such as Shire or Warner Chilcott, and has had the same number or
more than much larger companies like GlaxoSmithKline, AstraZeneca,
Merck and Eli Lilly. Forest now boasts one of the strongest and
most diverse product portfolios and pipelines in the industry, in
large part due to our strong core competency in our key therapeutic
focus areas and our status as a partner of choice, as evidenced by
our numerous repeat collaborations.
We have a long track record of successful product selection,
product development and sales and marketing execution – and the
investments we are making to support our products are both prudent
and necessary to help them reach their full potential. There are of
course substantial upfront expenses associated with successfully
developing and launching new products. However, we have managed our
expenses carefully and have kept our costs at appropriate levels
when taking into account the many new products we have in
development and in the early-stage launch phase. This gives us
great optimism about our future prospects, and we believe we will
once again deliver substantial progress in the coming year.
OUR PRODUCT PORTFOLIO AND PIPELINE ARE A
STRONG FOUNDATION FORFUTURE GROWTH AND VALUE CREATION FOR
SHAREHOLDERS
We have deliberately and strategically
diversified our product portfolio so that we should not be
dependent on any single product or therapeutic area. Today,
Forest has one of the strongest, most diverse pipelines in pharma,
with multiple branded products in six large therapeutic areas:
cardiovascular, CNS, pain, gastrointestinal, respiratory and
anti-infectives.
[SEE CORRESPONDING GRAPHIC]
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These areas are six of the eight most common disease states that
primary care physicians (PCPs) treat. Having a broad portfolio of
products to promote to PCPs will drive meaningful commercial
synergies as Forest generates significant operating leverage from
cross-selling multiple products to PCPs. For example, Forest
already calls on approximately 80% of the physicians to which it
expects to promote linaclotide when approved. Through its broad
access to and understanding of these physicians, Forest can create
higher product sales and more profitable products.
Forest’s PCP-centric business model and unique promotion
capabilities are currently driving the strong product growth of our
newest launches. Within the last year, Bystolic, Savella, Teflaro,
Dalisresp and Viibryd have generated significant revenues driven by
rapidly increasing market adoption rates and continued physician
satisfaction. The strong prescription growth rates of Bystolic (20%
vs. CQ1 2011), Viibryd (42% increase YTD), and Daliresp (42%
increase YTD) offer further evidence that our pipeline plan is on
course. Furthermore, given the respective market sizes and varied
therapeutic area focus of each drug, we believe we have built a
well-diversified product portfolio that has several potential
candidates to reach blockbuster status.
For example, Bystolic, which was launched in a highly
genericized market in 2008, is growing strongly, and in combination
with valsartan, it could achieve blockbuster status. We also expect
strong long-term growth trajectories for Viibryd, Daliresp, and
Teflaro. We will employ the same prudent investment strategy to
drive aclidinium and linaclotide upon product approvals this year,
and we expect the combined sales of our portfolio of products to
drive significant top-line growth and profitability in the years to
come. But don’t take our word for it; see what pharmaceutical
research analysts have to say:
PHARMACEUTICAL INDUSTRY ANALYSTS AGREE
FOREST IS WELL POSITIONED FOR THE FUTURE1
“Simple analysis supports significant pipeline value: A key
element of our Buy thesis has been our view that theevolution of
FRX’s pipeline has not been fully appreciated, and that this could
change as investors revisit FRX inthe wake of the Lexapro patent
cliff and as numerous pipeline catalysts hit in 2012.”
– Gregg Gilbert, Gregory Fraser and Suman
Kulkarni, Bank of America Merrill Lynch, 6/8/12
“...[W]e can’t ignore FRX has been crushing it on the
development side, and is flush with product launches to
drivegrowth, cash to reload, and durable IP. We don’t see launches
like the old days but linaclotide is as exciting anopp’y as Spec
Pharma gets.”
– Corey Davis, Jefferies, 4/18/2012
“We rate FRX Outperform for several reasons including: (1)
the underappreciated blockbusterpotential of FRX's aclidinium and
aclidinium/formoterol franchise based on increasingly
positivefeedback from MEDACorp clinical and regulatory KOLs; (2)
potential for sustained double-digitaverage sales growth through
fiscal 2020 driven by seven new U.S. product launches;
(3)considerable financial flexibility to execute accretive M&A
transactions; and (4) FRX's overallscarcity value following an
unprecedented Phase III hit rate which should allow for up to seven
outof seven new product approvals/launches in just 3-4 years...”
– Seamus Fernandez, Leerink Swann,
5/31/2012
“Management is transitioning Forest to an even more powerful
commercial entity with deep therapeutic verticals,selling
synergies, and a bright growth outlook beginning next year.”
– Irina Rivkind, Cantor Fitzgerald,
6/21/12
“Forest has had strong development and regulatory
performance over the past several years, leaving the companywith a
robust portfolio of new product opportunities that should
ultimately translate to a significant recovery intopline and EPS
performance.”
– Chris Schott, JP Morgan, 6/20/12
“We estimate that by F2019, FRX’s new product launches and
late stage pipeline have the potential to generate salesof $4B+
which could more than offset Lexapro and Namenda sales lost to
generic competition. The bottom line isthat FRX has many potential
shots on goal to increase its earnings potential with a full
pipeline, large cash balanceand no debt.”
– Louise Chen, Auriga, 4/26/12
“Forest’s strong balance sheet, robust cash flow and
leverageable commercial platform should provide the companywith the
ability to grow revenues at an attractive rate after the loss of
Lexapro and Namenda.”
– William Tanner, Colleen Mackay and
Meredith Cheng, Lazard, 6/11/12
“Forest has had an amazing success rate with respect to
moving its pipeline forward. And it should be commendedfor this
(above normal) success rate.”
– Marc Goodman, Ami Fadia and Derek Yuan,
UBS, 6/21/2012
1 Permission to use quotations neither sought nor obtained.
CORPORATE GOVERNANCE IS A CONTINUING
PRIORITY OF YOURSTRONG AND INDEPENDENT BOARD
Forest’s Board represents a balance of continuing leadership and
new perspectives, including five new independent directors, half of
the existing Board, in the last six years. In 2011, our
shareholders elected three new highly qualified and experienced
independent directors to our Board, adding to the Board’s financial
acumen, operational skills, investor perspective and corporate
governance leadership.
In keeping with our commitment to shareholders, the three new
independent directors elected in 2011 have been extremely active,
have taken leadership roles on key committees, and each currently
serves on two Board committees.
- Christopher J. Coughlin, Lead
Director of Dun & Bradstreet, former Chief Financial Officer
and Executive Vice President of Tyco International, and former
Chief Financial Officer of Pharmacia Corporation, serves as
Chairman of the Audit Committee and is
a member of the Compensation Committee;
- Gerald M. Lieberman, former
President and Chief Operating Officer of AllianceBernstein, serves
as Chairman of the Nominating and Governance
Committee and is a member of the Compensation Committee;
and
- Brenton L. Saunders, Chief
Executive Officer of Bausch + Lomb, serves on our Board Compliance
Committee and Compensation Committee.
In addition, Dr. Nesli J. Basgoz, the Associate Chief for
Clinical Affairs, Division of Infectious Diseases at Massachusetts
General Hospital, was elected to our Board in 2006, and Dr.
Peter J. Zimetbaum, Director of Clinical Cardiology at Beth
Israel Deaconess Medical Center and Associate Professor of Medicine
at Harvard Medical School, joined in 2009. Dr. Basgoz and Dr.
Zimetbaum each serve on both the Board Compliance Committee and the
Nominating and Governance Committee. As set forth above, these
Board members include a current CEO, former CFO and former COO of
major corporations and top medical professionals from two of the
country’s leading medical institutions.
These individuals join our other board members with diverse and
complementary backgrounds spanning a wide range of disciplines,
such as medicine, law, business, accounting and finance. The board
members include a former Chairman of the American Bar Association’s
Committee on Law and Accounting and former Dean of the Faculty of
the Mt. Sinai Medical School in New York. Mr. Icahn’s claim that
any of our directors could be dominated by management or anyone
else is completely baseless and defies common sense.
YOUR BOARD UNANIMOUSLY
RECOMMENDS THAT SHAREHOLDERS VOTE FOR OURFULL SLATE OF 10 HIGHLY QUALIFIED DIRECTORS AT THE
ANNUAL MEETING
Our Board is both determined – and well
equipped – to ensure that Forest continues to advance its robust,
late-stage pipeline and execute its commercialization
strategy. Over the past year, we have taken additional steps
to enhance our corporate governance and compensation policies in
response to shareholder feedback, to incorporate best practices,
and to address the evolving needs of Forest’s business. For
example, this year the Compensation Committee of the Board of
Directors – which includes all three of our new directors added in
2011 – retained an independent compensation consultant to review
senior executive compensation at Forest. Subsequent to that review,
the Committee implemented new stock ownership guidelines for
directors and senior executives and made changes to Forest’s
compensation program to continue our policy of aligning director
and executive pay with shareholder interests.
In addition, as we previously disclosed, the Board is engaged in
ongoing succession planning. In November 2010, we announced a
series of senior executive promotions, which were implemented to
ensure a successful CEO transition at the appropriate time by
moving a number of our most talented employees into roles of
increasing responsibility. Elaine Hochberg was promoted to
Executive Vice President (EVP) and Chief Commercial Officer; Frank
Perier Jr. was promoted to EVP Finance and Administration and Chief
Financial Officer; David Solomon was promoted to Senior Vice
President (SVP) Corporate Development and Strategic Planning; and
Dr. Marco Taglietti was promoted to SVP Research and Development
and President, Forest Research Institute.
The independent directors have a deep bench of management talent
from which to evaluate potential CEO successors. The process is
being led by our independent directors, who have directly retained
Spencer Stuart, a leading executive search and recruitment firm, to
assist with the succession process, including the consideration of
internal and external candidates.
Our Board recognizes that a commitment to good governance must
be a continuing priority for any company. To ensure our policies
remain aligned with our business needs and the most current best
practices – and to fulfill the commitment we made to shareholders
last year – we are consulting with Robert C. Clark, a Harvard
University Distinguished Service Professor and former Dean of
Harvard Law School. A leading authority in corporate law and
corporate governance, Dean Clark advised us on our corporate
governance policies, including the succession process. Our full
Board intends to further this commitment by continuing to consult
with experts on an annual basis. Additional steps the Company has
taken to enhance its corporate governance are detailed in a
publicly available corporate governance white paper, found in the
Corporate Governance section of Forest’s website.
WE STRONGLY URGE YOU
TO REJECT ICAHN’S NOMINEES
You will recall that Carl Icahn, the well-known corporate raider
now trying to reinvent himself as a corporate governance guru,
waged – and lost – a proxy contest against Forest in 2011. Despite
our clear progress and promising future, Mr. Icahn is again seeking
to replace four members of Forest’s Board and recycling many of the
same baseless arguments that were rejected last year by an
overwhelming majority of Forest shareholders.
We believe Mr. Icahn’s 2012 slate is even weaker than last
year’s. It is led by Eric Ende, who was nominated by Mr. Icahn last
year and received the fewest number of votes of any of the fourteen
director nominees in 2011. Eric Ende also has a highly unusual
compensation arrangement with Mr. Icahn that a corporate governance
expert has already drawn into question because it gives him
incentives to favor Icahn’s profits over the interests of the rest
of our shareholders. Another of Mr. Icahn’s nominees, Daniel
Ninivaggi, is a salaried employee of Icahn Enterprises with no
pharma experience. In addition, Mr. Icahn has nominated Andrew
Fromkin and Pierre Legault, both of whom have limited relevant
experience; even more troubling, we believe Mr. Fromkin is
conflicted as a result of his prior association with Clinical Data,
a company we acquired in 2011. Forest’s Board has carefully
reviewed and considered Mr. Icahn’s nominees and has determined
that his candidates are far less qualified than our slate of
experienced directors.
Mr. Icahn has had an open invitation to discuss his ideas or
provide feedback since his defeat at last year’s Annual Meeting.
Rather than engaging in a constructive dialogue over the past year,
Mr. Icahn did not contact the Company until he threatened another
proxy contest in late May, and has since resorted to his standard
playbook of wild allegations, rants and litigation tactics. This
type of mud-slinging is pointless, tiresome and counterproductive
for shareholders.
OUR PROMISE TO
SHAREHOLDERS
Over the past year, we have worked hard to fulfill our
commitments to you and we will continue to do so. As we move
forward, we will remain keenly focused on serving your interests,
working constructively with our active, strong and independent
Board, and continuing to develop our pipeline and product portfolio
– which is the key to building shareholder value.
Your Vote is Important
– Please Submit the WHITE Proxy Card Today
Forest’s upcoming Annual Meeting is an important event in
shaping our 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, and the risk factors listed from time to time in Forest
Laboratories’ Annual Report on Form 10-K, 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’ 2012 Annual Meeting. Forest Laboratories has 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. Information regarding the ownership of
Forest's directors and executive officers in Forest stock,
restricted stock and options is included in their SEC filings on
Forms 3, 4 and 5, which can be found at the Company's website
(www.frx.com) in the section "Investors." More detailed information
regarding the identity of potential participants, and their direct
or indirect interests, by security holdings or otherwise, is set
forth in the Proxy Statement and other materials to be filed with
the SEC in connection with Forest Laboratories' 2012 Annual
Meeting. Information can also be found in Forest's Annual Report on
Form 10-K for the year ended March 31, 2012, filed with the SEC on
May 25, 2012. 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.
This document contains quotes and excerpts from certain
previously published material. Unless otherwise indicated, consent
of the author and publication has not been obtained to use the
material as proxy soliciting material.
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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