€5.4bn wiped off Elan shares

ELAN had €5.4 billion wiped off its share value yesterday as shareholders saw the value of their investments fall by 68.62%.

Yesterday’s share debacle pales in comparison with the events of 2001/’02 when close to €23.7bn was wiped off the value of the company. However, investors were still left reeling, with the Irish stock market down 4% as a result.

Yesterday morning Elan was worth €7.926 billion, well off the company’s peak of €24.5bn but well ahead of its €835 million low in 2002. By close of business yesterday Elan was worth €2.53bn.

Shares in Elan and its partner Biogen Idec plummeted after the companies suspended sales of their much-heralded new multiple sclerosis drug Tysabri after a patient died from a rare and often fatal central nervous system disease. Another patient suffered adverse reactions after using a combination of Tysabri and another drug Avonex.

“We are working with leading experts and regulatory agencies to responsibly investigate these events and to develop the appropriate path forward,” said Lars Ekman, executive vice-president and president of research and development with Irish-based Elan. “Our primary concern is for the safety of patients.”

The company said about 3,000 patients have been treated with Tysabri in trials of MS, Crohn’s disease and rheumatoid arthritis.

Geoff Porges, an analyst with Bernstein & Co, said a huge safety cloud will hang over the drug if it comes back on the market.

“It will require a set of investigations of all patients pre-and post marketing approval,” he said. “That is likely to take months, not days or weeks.”

Many investors believed Tysabri was the antidote to Elan’s problems, but once again it proved to be a false dawn for investors who must wonder if they will ever recover the billions they have lost since 2001.

There are growing fears in Athlone that more than 400 jobs may be under threat in the Elan plant.

Athlone Mayor Austin Berry said: “It would be a tragedy if anything were to happen. Elan came through a tough time in 2002, and it is a very important industry in this town.

“All we can do now is wait and see, and hope that things improve in the next few days.”

Tysabri is not manufactured in Athlone, but it was to the forefront of the company’s worldwide revival after the traumatic downturn of 2002. Staff at the plant were briefed yesterday.

The share collapses comes just as Elan is expanding its Athlone plant, with up to 120 jobs set to be created at the plant at Monksland.

Local Fine Gael TD Denis Naughten said the news was “a huge blow to the town and its hinterland”.