US authorities seek Elan documents on announcements

US AUTHORITIES have asked Irish biotech group Elan for documents and information about two announcements in late July 2008 which, between them, knocked two-thirds of the value off the company’s share price.

Elan disclosed yesterday that it had received a subpoena from the US Securities and Exchange Commission (SEC) which regulates companies listed in the US.

This is over its disclosure of two cases of progressive multifocal leukoencephalopathy (PML), a sometimes fatal brain disorder tied to use of its Tysabri multiple sclerosis drug. In a regulatory filing yesterday, Elan said it received the subpoena last Thursday in connection with the July 31st, 2008, disclosure.

The Dublin-based company developed the multiple sclerosis drug with US partner Biogen Idec.

Elan said the subpoena also requested records and information about its July 29th, 2008, discussion of clinical trial data for its bapineuzumab drug intended to treat Alzheimer’s disease.

The company disclosed the subpoena in a filing outlining plans to refinance its debt. It said it intended to provide the SEC with “materials in connection with the investigation”. The PML cases at the centre of the SEC inquiry were the first to emerge after the drug’s return to market. It had previously been pulled from the market when PML first emerged in a small number of patients but was cleared to resume sales with tougher safety warnings because of its acknowledged efficacy.

The company was unable to clarify at the time the July 2008 PML cases emerged whether it knew of them a week earlier when it had issued an upbeat assessment on Tysabri sales. There was also some disquiet among analysts on the second issue being pursued by the SEC.

Negative reaction to the bapineuzumab results was exacerbated by the perception that headline figures published by the company and its partner Wyeth a month earlier had been unduly positive, triggering a 10 per cent jump in Elan shares.

Elan’s stock price has never returned to the levels at which it was trading ahead of the double whammy in late July 2008. Johnson Johnson this month bought an 18.4 per cent stake in Elan and control of Elan’s rights related to an Alzheimer’s immunotherapy programme.

Elan plans to sell $600 million of senior bonds due in 2016 to help refinance debt and for general corporate purposes, the company said in a statement.

The group is also offering to buy back the $850 million outstanding in its 7.75 per cent 2011 notes. The company is offering $1,019.38 per $1,000 of bonds tendered.