NEW YORK, Aug. 13, 2012 /PRNewswire/ -- Carl Icahn made the following comments on
Forest Labs (NYSE: FRX):
On August 1, 2012, Forest received
a warning letter from the FDA, regarding a violation of Daliresp
promotional practices by its sales reps. This warning letter
follows another warning letter from the FDA in April 2011 regarding unethical sales practices by
a Forest sales rep concerning Savella. Importantly, both of
these letters were issued AFTER Forest's settlement with the
US Department of Justice in September
2010 regarding similar unethical sales practices pursuant to
which Forest pled guilty to a felony charge, paid over $300 million in fines and signed a 5-year
Corporate Integrity Agreement to resolve these matters.
It is obviously worrisome that these practices would be ongoing
at Forest given its chequered history in similar matters. In
fact, Forest has received 2 of the last 43, or about 5%, of all
warning letters of this type issued by the FDA in the last 18
months despite thousands of products being promoted by hundreds of
companies. And more importantly, Forest is one of the only
companies lax enough to receive multiple warning letters while
subject to a Corporate Integrity Agreement. Moreover, it is
alarming that the FDA specifically states in the warning letter
that it is concerned given the pre-existing requirements under the
Corporate Integrity Agreement. It should be noted that Forest
previously disclosed that "failure to comply with the terms of the
Corporate Integrity Agreement could result in substantial penalties
and potential exclusion from government health care programs" and
this is a potential breach of Forest's obligations under that
agreement.
And why wouldn't Forest disclose this to shareholders in the
10-Q it filed on Friday, August 10,
2012. I am sure they will say that they were advised that
they could get away without disclosure. But that is neither
the right answer for shareholders nor the right message to the
management. In fact, I believe that Forest has been very aggressive
in its lack of disclosure with the SEC – many of their major
license agreements are not publicly filed with the SEC even though
all material agreements are required to be filed with the SEC and
they have been opaque on their succession plans, to name just a few
deficiencies.
This is yet another example of the stark lack of corporate
governance at Forest where an ineffective Board made up largely of
non-independent directors is unwilling or unable to hold
Howard Solomon and his management
team accountable. From personal experience I can tell you
that Dan Ninivaggi has great
experience in the area of corporate governance and management
accountability and he would not be a wallflower on this
Board. Additionally, Pierre
Legault has a strong operational background in employee
supervision and human resources, an area that appears to be lacking
at Forest. We need to add strong independent directors, like
Dan Ninivaggi and Pierre Legault, my two nominees recommended by
ISS, as well as my other nominees, to instill much needed corporate
governance and independence on the Board and bring this great
company back to the shareholders.
ON JULY 23, 2012, THE PARTICIPANTS
(AS DEFINED BELOW) FILED A DEFINITIVE PROXY STATEMENT WITH THE
SECURITIES AND EXCHANGE COMMISSION. SECURITY HOLDERS ARE ADVISED TO
READ THE DEFINITIVE PROXY STATEMENT AND OTHER DOCUMENTS RELATED TO
THE SOLICITATION OF PROXIES BY CARL C.
ICAHN, DR. ERIC J. ENDE,
PIERRE LEGAULT, ANDREW J. FROMKIN, DANIEL A. NINIVAGGI, ICAHN PARTNERS LP, ICAHN
PARTNERS MASTER FUND LP, ICAHN PARTNERS MASTER FUND II L.P., ICAHN
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HOPPER INVESTMENTS LLC, BARBERRY CORP., ICAHN ENTERPRISES G.P.
INC., ICAHN ENTERPRISES HOLDINGS L.P., IPH GP LLC, ICAHN CAPITAL
L.P., ICAHN ONSHORE LP, ICAHN OFFSHORE LP, AND BECKTON CORP.
(COLLECTIVELY, THE "PARTICIPANTS") FROM THE STOCKHOLDERS OF FOREST
LABORATORIES, INC. FOR USE AT ITS 2012 ANNUAL MEETING OF
STOCKHOLDERS, BECAUSE THEY CONTAIN IMPORTANT INFORMATION, INCLUDING
INFORMATION RELATING TO THE PARTICIPANTS. THE DEFINITIVE PROXY
STATEMENT AND A FORM OF PROXY IS AVAILABLE TO STOCKHOLDERS OF
FOREST LABORATORIES, INC. FROM THE PARTICIPANTS AT NO CHARGE AND IS
ALSO AVAILABLE AT NO CHARGE AT THE SECURITIES AND EXCHANGE
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SOURCE Carl Icahn