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Elan's CEO Kelly Martin has sent
a letter to shareholders attacking a dissident shareholder he terms a
'detractor' and he also rejects claims made by legal counsel of two board
members of the Irish pharmaceuticals group.
In the High Court in Dublin on
Monday, Elan was granted a temporary restraining order against Vaughn
Bryson and Jack Schuler, two US-based independent directors who were appointed
to the board in July following a campaign criticising the company. The dissident
directors claim Elan failed to provide full disclosure to the board on the
$1.5bn recapitalisation concluded with Johnson & Johnson last year. The High
Court action was to prevent them from holding an “unauthorised” parallel
investigation into corporate governance at Elan.
In a separate
dispute, a group of Elan investors led
by Ib Sonderby, a Danish national, have
attacked the company over claimed
conflict of interest issues and Sonderby
is reported to be planning to announce
today, three candidates he wants to
place on the board.
Kelly Martin accused Sonderby of
“deliberately spreading misinformation” and making false allegations.
The Dane has
alleged conflicts of interest in the sale of painkiller Prialt
to Azur Pharma, in which a number of Elan directors own shares.
A claimed “sweetheart” deal in a licensing agreement with
drugs firm Amarin, relates to an alleged conflict of interest by
Elan's CFO Shane Cooke, whose brother works with Amarin.
In July Elan
reported that its second-quarter net loss widened to $213.1m
from $68.2m after the company set aside $206.3m to settle US
government charges linked to the sale and marketing of the
Zonegran epilepsy treatment.
Martin rejected
criticism of an expected settlement of the Zonegran charges and
says in his letter: "It also is important to realize that the
Zonegran agreement in principle is a misdemeanor instead of a
felony."
Martin said in
his letter in relation to the board dispute: "Today, we filed
a proceeding in response and with the goal of enabling the
independent review -- conducted by a former President of the
American Bar Association -- to proceed unimpeded. The Court has
granted all of our requests including injunctive relief. The
need to take this action is regrettable but we will not allow
the two directors to hijack the independent review before its
scheduled presentation to the full board."
Ib Sonderby
commented on his
blog
in response to Martin's letter: "I read Mr. Martin’s letter
to shareholders with great interest and, despite the misleading
nature of his statement and the letter’s ugly tone, I applaud
his newly adopted standards for disclosure. Mr. Martin is very
right in presuming that I am concerned with the price of Elan’s
stock, a sentiment shared, no doubt, by all recipients of this
letter. I look forward to responding to his statements point by
point in due course.
In the
meantime, I see that Elan has revealed a previously undisclosed
internal investigation. Given Elan’s newly adopted disclosure
policies, perhaps Mr. Martin can tell us the subject of this
investigation. While I am encouraged by the board’s willingness
to audit its own behavior, the recent court proceedings raise
some concerns about the independence of this investigation. I
trust that this former President of American Bar Association,
whose name I would like to know, will not sacrifice his
reputation for client fees."
