The Monksland-based phamaceutical firm Elan has been summoned to appear in a Federal court in the US after disclosing two cases of a brain disorder related to its trump product, prior to a €605m ($885m ) share sale earlier this month.
Elan has been subpoenaed to appear before the Securities and Exchange Commission (SEC ), Wall Street’s watchdog, over the company's disclosure of the two cases, tied to the use of its Tysabri multiple sclerosis drug.
The value of its shares fell 21c to $7.13 (€4.90 ) during trading in New York with the news this week, but this was a lot less than the two thirds (64 per cent ) fall in value in a three-day period last year after the initial disclosure.
The company disclosed the subpoena in a filing outlining a plan to sell €411m ($600m ) of a seven-year debt as part of a plan to restructure the company's borrowings.
Tysabri accounts for a large part of Elan's sales and profit and is regarded as essential to the company's future.
This probe came to light a fortnight after US giant Johnson & Johnson paid $885m for an 18.4pc stake in Elan and most of its rights related to its Alzheimer's immunotherapy programme.
A spokesperson for Elan said the subpoena also requests records and information about its July 29, 2008 discussion of clinical trial data for another of its drugs, bapineuzumab, which is used to treat Alzheimer's.
Early last month the Monksland firm announced 29 workers would be made redundant, in addition to the 90 last February at the plant.
Elan employs more than 500 people at its plants in Dublin and Athlone.
“We intend to provide the SEC with materials in connection with the investigation,” Elan said in the filing, which the company made as part of the planned bond sale.
Elan's shares plunged 32 per cent on July 30 last year after the bapineuzumab disclosure the previous day.
Two days later, on August 1, the stock tumbled 46 per cent after the two cases of the brain infection, known as progressive multifocal leukoencephalopathy, were disclosed.
The plunge triggered concern among some investors about Elan's management, and saw shareholder Jack Schuler get elected to the board of directors after his criticism of CEO Kelly Martin last December.
This is not Elan’s first run-in with the SEC.
In 2002, its share price fell by 95 per cent after a probe into its accounting procedures, which resulted in the resignation of CEO Donal Geaney, and a non-admission civil penalty.
