BIOTECH GROUP Elan has been cleared of breaking corporate governance rules in a series of transaction over the past year.
However, the company has undertaken to consider the introduction of a new policy on conflicts and changing the way it reports regulatory filings.
A report by US law firm McKenna Long Aldridge found “no legal breaches or other wrongdoing of any nature” by Elan management of any director, the company said in a statement released before markets opened.
“The board approved the McKenna report in full and accepted its recommendations, including considering the feasibility of voluntarily complying with US domestic reporting requirements notwithstanding Elan’s status as a foreign private issuer.”
Jack Schuler and Vaughn Bryson, the dissident shareholders, who originally made the allegations and who have been at odds with fellow directors over the investigation have said they will resign from the board of Elan within 90 days.
They have agreed to suspend an Irish High Court hearing at which they were seeking to run a separate investigation into the same allegation “in light of the board’s support and acceptance of the McKenna report, and the ultimate implementation of its findings”, the company statement said.
Elan said the board had been unanimous in its approval of the report.
Mr Schuler and Mr Bryson were appointed to the board only last year as part of an agreement to settle a campaign by some shareholders against the way the company was being run.
An earlier McKenna report was commissioned about the same time to address those concerns.
However, within months, Mr Schuler and Mr Bryson raised new issues. These were triggered by the disclosure of clauses within the deal that saw Johnson Johnson acquire an 18.4 per cent stake in Elan and control of its most advanced Alzheimer’s disease therapy programme.
Mr Schuler and Mr Bryson criticised the failure to disclose key information, including clauses under which Johnson Johnson could have secured a half share in Elan’s blockbuster drug for multiple sclerosis, Tysabri, produced in conjunction with US group Biogen Idec.
The terms of that deal were revised downwards after it emerged that the arrangement agreed by Elan and JJ was improper.
There were also allegations of conflicts of interest in the sale of painkiller Prialt to another company, Azur Pharma, where a number of Elan directors own shares and in a licensing deal with a company called Amarin.
For its part, Elan has referred to the US regulator, the Securities and Exchange Commission concern over issues relating to Mr Schuler’s share dealings while a director. Mr Schuler’s legal advisers have said he considers the SEC referral meritless. – (Additional reporting, Reuters)
