Icahn Criticizes Forest Labs on FDA Warning Letter
August 14th, 2012 // 12:49 pm @ jmpickett
Activist investor Carl Icahn criticized Forest Laboratories Inc. (FRX) for failing to disclose its latest warning letter from the U.S. Food and Drug Administration for a violation of promotional practices by the company’s sales representatives regarding its drug Daliresp.
In a letter to Forest Labs dated Aug. 1 that was recently posted on the agency’s website, the FDA said it has become aware of statements made by the drug maker’s sales representatives in October 2011 to a healthcare professional regarding its chronic obstructive pulmonary disease treatment Daliresp. The FDA said the representatives’ statements were false or misleading because they broadened the indication and minimized serious risks for Daliresp.
The FDA said it is concerned the violations occurred despite the company’s corporate integrity agreement with the Department of Health and Human Services. It also noted the false and misleading statements from sales representatives are “particularly troubling” as the agency had expressed concerns regarding similar violations as recently as last year. Forest Labs received a warning letter from the FDA in April 2011 concerning statements made by a sales representative which promoted unapproved uses for its fibromyalgia drug Savella drug and minimized risks associated with the drug.
A Forest Labs representative was not immediately available for comment.
Monday, Mr. Icahn said Forest Labs “has been very aggressive in its lack of disclosure with the SEC,” noting the company did not disclose the warning letter to shareholders in the 10-Q it filed on Friday. Mr. Icahn said the lack of disclosure is “another example of the stark lack of corporate governance,” at the company and said his board nominees could bring the company back to shareholders.
The long-running spat between the parties was revived in June when Mr. Icahn, whose investment affiliates own almost 10% of Forest’s shares, 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.”
