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CARTER-WALLACE SUBMITTING ADDITIONAL FLUPIRTINE EFFICACY STUDY, FIRM TELLS SHAREHOLDERS; HOYT FAMILY GAINS VOTING STRENGTH WITH ANTI-TAKEOVER MEASURE

Executive Summary

Carter-Wallace plans to submit an additional efficacy study in support of its NDA for flupirtine, Chairman Henry Hoyt, Jr., noted at the company's annual meeting, held July 21 in Wilmington, Delaware. An NDA for the non-narcotic analgesic was originally filed in April 1986. Of four prescription products discussed at the meeting, flupirtine will likely be the first to emerge from the Carter-Wallace R&D pipeline. With the additional study currently in progress, the company is projecting a mid-1989 approval date. Hoyt reported that azelastine, an asthma and nasal allergy treatment currently in Phase III, should be ready for NDA submission at the end of 1988. Approval is expected by late 1990. Both flupirtine and azelastine are licensed from the West German firm Degussa, as is a third developmental compound, acrihellin, a cardiotonic agent for treatment of congestive heart failure now in Phase I. In addition, clinical work is continuing on felbamate, an anticonvulsant targeted for a 1992 approval. The Phase II product was developed in-house, by Wallace Labs. The company noted in its annual report for 1987 that Johnson & Johnson has resumed clinical testing of Akzo's bepridil, a calcium channel blocker sublicensed from Carter-Wallace. "As advised by the FDA's Cardio-Renal Committee," the report states, "additional clinical studies, currently in progress, to support the safety and efficacy of bepridil are required before approval could be recommended." At the company's 1986 annual meeting, Hoyt indicated that new studies evaluating bepridil as a last resort treatment for angina would take approximately two years to complete. In a separate meeting development, Carter-Wallace shareholders adopted an anti-takeover measure that gives the Hoyt family increased voting strength through a new class B stock distribution plan. The family currently owns 51% of outstanding Carter-Wallace common, and the plan increases the Hoyt's effective control by allowing the exchange of common stock for the more heavily weighted class B common shares. With A. H. Robins now negotiating a definitive merger agreement with Rorer, Carter-Wallace could become the last major U.S. pharmaceutical firm to remain under the control of founding family members. The adopted amendment to the company's certificate of incorporation contains two parts. First, it authorizes an increase in the number of common shares, from 10 mil. to 30 mil. Second, it authorizes the creation of 10 mil. shares of new class B stock, with each share having 10 votes. Under the approved proposal, one share of class B will be distributed, at a future date, for each outstanding common share. "The transferability of the class B common stock will be significantly restricted," the company explained in its most recent proxy statement. "'Permitted transferees' will include certain family members of the holder and certain entities controlled by, or for the benefit of, the holder and such family members." While all class B shares are convertible into regular common, investors holding their class B shares over the long term have greater voting power than short-term holders. The plan is an attempt to ensure the firm's operating strategy of long-term growth at the price of short-term gains by giving Carter-Wallace the flexibility to issue equity to finance future growth without increasing susceptibility to an unfriendly takeover bid. The company has never used debt to finance an acquisition, and has generally retained a substantial portion of its net earnings for corporate purposes.
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