By Saabira Chaudhuri
Carl Icahn has fired back at Forest Laboratories Inc.'s (FRX)
board, writing another harshly worded letter despairing the
company's prospects, the latest move in a long-running battle
between the drug maker and the billionaire investor.
In his latest salvo, Mr. Icahn said the company is unprepared
for the upcoming patent cliff for Alzheimer's drug Namenda, which
could be "devastating" for the company, and was "completely
unprepared for the Lexapro patent cliff."
In Tuesday's letter, Mr. Icahn said he believes "Forest Labs is
in crisis." He added that Chief Executive Howard Solomon will be
"wrong again about his currently optimistic view of the company's
pipeline," noting that Forest's new pipeline drugs have missed
guidance eight out of 11 times in the past four years.
"I strongly believe that this current crisis is the direct
result of strategic flaws that have caused a lack of focus and cost
inefficiency. At the core of these strategic flaws is the board's
decision to allow David Solomon, Howard Solomon's son, to be unduly
given so much responsibility over such a critical area as strategic
planning," Mr. Icahn said.
He again urged shareholders to vote in favor of his four board
nominees.
The skirmish between Forest Labs and Mr. Icahn was revived in
June when Mr. Icahn nominated four candidates to Forest's 10-member
board and said he was seeking records of the company's actions. In
response, Forest said Mr. Icahn's nominees have "significant and
obvious conflicts and entanglements that compromise their
independence and ability to represent all Forest shareholders."
Last week, Mr. Icahn fired back at Forest, saying that he
doesn't believe this board has "the slightest grasp over what
constitutes a conflict." Mr. Icahn has, in the past, pointed to
companies that improved after his nominees were on their boards,
mentioning firms such as Amylin Pharmaceuticals Inc. (AMLN) and
Biogen Idec Inc. (BIIB) as examples.
Last week, Forest reported fiscal first-quarter earnings that
fell 79% as the pharmaceutical company was hit by sharply lower
sales of Lexapro---its antidepressant--which masked growth from
some of its other drugs.
Forest Labs last month reduced its fiscal-year earnings guidance
because of lower-than-expected branded Lexapro sales and
more-aggressive pricing for the authorized generic version of the
antidepressant following the March loss of the drug's patent
exclusivity.
Forest's shares closed at $34.28 Monday and were inactive in
recent premarket trading. The stock is up 13% so far this year.
Write to Saabira Chaudhuri at saabira.chaudhuri@dowjones.com
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