For two summers, a fight between Forest Laboratories ($FRX) and Carl Icahn provided the industry with plenty of drama as the activist investor fought to install a slate of allies on the drugmaker's board. The deadline is again looming to nominate alternative directors, but there is a chance Forest may be able to appease Icahn enough to prevent a third public brawl.
Citing sources, Reuters reports Forest and Icahn, the company's second largest shareholder, have been talking all year to avoid a repeat. Neither were available to comment on what it would take, but Icahn has made his position clear in the past. He believed CEO Howard Solomon was not prepared to take the company into a future devoid of its big sellers--antidepressant Lexapro and the Alzheimer's treatment Namenda--as generics undercut the revenues. He also suggested Solomon intended to name his son CEO.
But, as Reuters points out, lots has changed. Solomon is retiring at years-end and the board is searching for a successor. A possible replacement would be Bausch & Lomb CEO Brent Saunders, a Forest board member, now that his company has been acquired by Valeant Pharmaceuticals ($VRX). The company's stock price is up, although earnings have been undercut by generic competition to Lexapro.
Icahn, who managed to get only one of his nominees elected last year, got some bargaining power when it was learned last month that the Department of Justice has subpoenaed documents related to Forest's new lung treatment Tudorza Pressair. One of Icahn's criticisms has been of all of the regulatory issues Forest has faced in recent years. It paid $313 million to settle an investigation of its off-label marketing and the Department of Health and Human Services even tried to exclude Solomon from the pharma industry, although the CEO ultimately staved off that move.
- read the Reuters story