We're wondering whether Forest Laboratories shareholders wish they could recast their proxy votes. The company's third-quarter sales tanked because of Lexapro's cut-rate generic competition, and it cut its outlook, both for revenue and earnings.
Profits fell, too, and so did Forest's shares; the stock slid by about 3% on the news. And no wonder: Sales of Lexapro, the antidepressant that once carried the company, plummeted by 93%, to a paltry $44.7 million. Overall sales dropped by 38% to $692 million. The company cut its earnings forecast to 45 cents to 60 cents, compared with analyst's expectations of 66 cents, Reuters says. And analysts cut their ratings.
The results follow a bitter proxy battle with activist investor Carl Icahn, who's been accusing Forest of mismanaging the Lexapro patent loss and fumbling on new drugs. Icahn said he wanted to replace four of Forest's long-term board members to inject some independent thinking. The company, led by CEO Howard Solomon, fought back--and in the end, Icahn won only one of the four seats he had sought.
Forest says that the latest financials are just a short-term hiccup on its path to renewed success. It has introduced several new drugs in recent months, and those new products delivered impressive sales growth, the company said. "We believe we are well on track to secure the sales and earnings to build long-term growth well into the future," CFO Frank Perier said (as quoted by Reuters).
Analysts weren't so sure. Cowen cut its rating to neutral from outperform, and Leerink Swann's Seamus Fernandez called the Q3 numbers a disappointment. "Today's results reinforce activist investors' position around Forest," Fernandez said. As for Icahn himself, he hasn't commented--yet.
- see the release from Forest
- read the Reuters news
Is the antidepressant glass half-empty or half-full?
Forest adopts 'poison pill' to fend off Icahn
Lexapro sales tank by 81% as Icahn fires back at Forest Labs
Forest Labs slashes forecast on wilting Lexapro sales