The four nominees billionaire investor Carl Icahn has proposed for Forest Laboratories Inc. (FRX)’s board are conflicted and lack necessary industry experience, said Frank Perier, the drugmaker’s chief financial officer.
“If you look at everyone on our board, they’ve had meaningful, real-life business or medical-practice experience,” Perier said today in a telephone interview. Icahn’s nominees have “no true hands-on business experience.”
Alex Denner, senior managing director at Icahn Enterprises LP (IEP) and a nominee, said Perier’s assertion is “factually incorrect.”
“For instance, does running a major biotech company not count as business experience?” Denner said in a telephone interview today, citing his time running ImClone Systems Inc. in 2007. “We would be very happy to have their four directors and our four get on a conference call so all shareholders can hear from each of them.”
Forest gained 82 cents, or 2.4 percent, to $35.31 at 4:15 p.m. in New York Stock Exchange composite trading. The shares have increased 10 percent this year.
Perier also said Denner and another Icahn nominee, Richard Mulligan, have conflicts of interest because they sit on the boards of Biogen Idec Inc. (BIIB) and Amylin Pharmaceuticals Inc. (AMLN), companies that compete with New York-based Forest. The other two nominees are Eric Ende and Lucian Bebchuk.
“Our entire business model is built upon licensing and acquiring drugs at various levels of development,” Perier said. “All of these potential products are reviewed with the board. We’re uncomfortable having that level of information shared with a conflicting company.”
Icahn has said in a regulatory filing this month that Denner and Mulligan “have no conflict to serve on Forest Labs’ board,” and “throughout the health-care industry, directors serve on multiple boards.”
The investor has targeted at least six companies in the pharmaceutical industry in the last four years, including Weston, Massachusetts-based Biogen, ImClone and Genzyme Corp., pushing to restructure, shake up management and orchestrate sales. ImClone was sold in 2008 to Eli Lilly & Co. for $6.5 billion. Paris-based Sanofi bought Genzyme in February for $20.1 billion.
At Forest, Icahn has criticized the company’s spending and said its “scattered efforts across therapeutic areas may not fill” a revenue gap from patent expirations in the next few years on the company’s top sellers, the antidepressant Lexapro and the Alzheimer’s medicine Namenda.
If Icahn wins board representation, his directors would look for ways to sharpen the company’s focus on medicines prescribed by primary-care physicians, Denner said. He cited the obstetrics medicine Cervidil and pain-management drug Combunox as areas Forest should exit. Combunox is a controlled substance that requires additional oversight and has increased regulatory costs, he said.
Perier today said both medicines are “legacy products” with annual revenue of $30 million to $40 million, and require no sales or marketing support from the company.
“If that’s where you’re going to get your synergies from, I think it gives you the order of magnitude of the level of actual understanding of our business,” Perier said.
Forest has proposed a 10-member board slate including three new directors. Shareholders are set to decide at the company’s annual meeting on Aug. 18.
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