Updated: Icahn eyes leaner drug research at Forest, Bloomberg reports

With Carl Icahn (photo) battling for board seats at Forest Laboratories ($FRX), those drug researchers whose work falls outside the billionaire investor's goals for the company are likely taking notice. Alex Denner, a senior member of Icahn's organization, tells Bloomberg his boss wants Forest to focus on drugs for which primary-care docs write scripts.

Denner's comments come less than a week before Forest shareholders determine the fate of the firm's board of directors. Icahn, who is aiming to gain four seats on the board, appears to be lobbying for a more streamlined approach at the company, which faces the loss of patents on its two best-selling medicines, the Alzheimer's drug Namenda and the antidepressant Lexapro. And it's no surprise to see Denner, who Icahn backed to get on Biogen Idec's ($BIIB) board, serving as a spokesman.

Denner is among the relatively fresh faces on the Biogen board who has pushed for a streamlined R&D effort. It likely only helps his and Icahn's appeal to Forest shareholders that Biogen, which has cut 17 programs from its pipeline and exited oncology drug development over the past year, has been on a major roll. Even after the recent decline in many biotech stocks, Biogen's shares are up about 32% on the year, aided considerably by positive data on the experimental MS drug BG-12. Forest's share price, on the other hand, has risen about 7% this year.

"If elected, we would work with the board to focus the company on opportunities that have positive return for shareholders," Denner told Bloomberg in a phone interview yesterday. "We would apply a return-on-investment rigor to spending and some of the smaller marketed products that are not within the primary-care focus."

Forest fired back this response to Denner's statements to Bloomberg this morning: “It is telling that insurgent nominee Denner, who purports to have experience qualifying him to be a director, would make such uninformed assertions. The core of the company’s marketing strategy has always been focused on primary care and the few non-primary care products Forest does have are highly profitable because they have lower marketing costs. In addition, we believe our shareholders and analysts understand that cutting spending while launching five new products is a recipe for failure. We are confident that our shareholders, unlike Denner, understand our business and our strategy and will come to the right decision.”

Clearly, what works at one company might not translate well to another, and this becomes truer still with drug developers focused on very different markets and patient populations. We'll find out next week whether any of the Icahn nominees can take a seat on Forest's board and start advocating for change.

- read Bloomberg's report

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Editor's Note: This story was updated with Forest's response.

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