May 30, 2012 / 10:29 PM / 6 years ago

Icahn takes another run at Forest Labs board

(Reuters) - Billionaire investor Carl Icahn, who last year failed to get his nominees elected to the board of Forest Laboratories Inc FRX.N, plans to back another slate of directors at the drugmaker’s next shareholder meeting, according to a regulatory filing on Wednesday.

Icahn holds 9.92 percent of Forest shares — up from 9.2 percent last August — making him the company’s second-largest shareholder behind Wellington Management’s 12.8 percent stake, according to Thomson Reuters data.

Icahn intends to have Dr. Eric Ende serve as a nominee and lead the proxy fight, the filing with the U.S. Securities and Exchange Commission said. Ende, president of Ende BioMedical Consulting Group and a former biotech analyst at Merrill Lynch, was also one of Icahn’s four proposed directors in his failed proxy fight last year.

Icahn’s proposed slate of directors would not constitute a majority of the board, the filing said.

“We always value constructive input from our shareholders, but we are puzzled and disappointed that Mr. Icahn’s first chosen method of engagement since last year is the threat of yet another proxy contest,” Forest Chief Executive Howard Solomon said in a statement.

Icahn did not return a call seeking comment.

The company said the nominating and governance committee of its board will evaluate the nominees and make a recommendation once they become known.

All of Forest’s directors will be up for reelection at the annual meeting. A date for the meeting has yet to be announced.

Since last year’s annual meeting in August, Forest shares are up about 3 percent, trailing a 9 percent gain for the NYSE Arca Pharmaceutical Index .DRG and a 17 percent rise for the broader S&P 500 Index .SPX. Forest shares closed up 5 cents at $33.66 on Wednesday.

Icahn, who has won representation on the boards of several biotechnology companies, in the past has been critical of Forest’s governance practices and the ways management has dealt with the expiration of patents on its biggest medicines.

After losing his proxy battle last year, Icahn said that “activism, especially in biotech, usually takes longer than you believe it will.”

At the time, he cited Biogen Idec Inc (BIIB.O), where it took Icahn three years to win three seats on the board, and ImClone Systems, where he helped engineer the sale of the company to Eli Lilly & Co (LLY.N).

Morningstar analyst Damien Conover said Forest had several recently launched products and a solid pipeline of drugs in development, making it a potentially attractive target for large drugmakers with a lot of cash and a dearth of new medicines.

“I would think Icahn’s motivation here is to get the firm to sell themselves for a premium,” Conover said.

Forest’s winning slate a year ago included three new board members nominated by the company after Icahn announced his challenge. The result represented a victory for Solomon, who has led the company since 1977.

Forest, which has a market value of about $9 billion, is seeing its profits pressured by patent expirations on its biggest products.

In its most recent quarter, profit plunged 40 percent as the company lost patent protection for its Lexapro antidepressant, ceding sales to low-cost generic versions. Alzheimer’s drug Namenda is expected to lose U.S. patent protection in 2015.

Forest has been attempting to build up its product portfolio to make up for the declines of Lexapro and Namenda, including drugs for depression and chronic obstructive pulmonary disease.

Editing by John Wallace and Gunna Dickson

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