Elan expects to emerge intact from investigation

Elan expects to have emerged intact from the Securities and Exchange Commission investigation and shareholder litigation that have dogged the firm for two years by the end of the third quarter.

Shareholders in the pharmaceutical company heard yesterday the firm was finally "free of the burden of crisis management".

They were also told that chairman, Mr Garo Armen, who took up the position just after Elan became mired in accounting problems in 2002, will be stepping down from the role over the next six months.

"I was drafted by the board to take on this responsibility at a time of crisis. I'm happy to report to you at this point that we no longer have a crisis," Mr Armen said.

Mr Armen is expected to remain on the Elan board after giving up the chairmanship. He will concentrate, however, on Antigenics, the US cancer drug firm he also heads. Antigenics will probably establish a manufacturing presence in the Republic in the future, Mr Armen said.

In reply to shareholder questions, Elan's chief executive, Mr Kelly Martin, confirmed that he had not yet spoken to the Securities and Exchange Commission (SEC) about its findings on the firm's complicated accounting structures, but said the board was "well-prepared" for the regulator's conclusions. The SEC is expected to contact Elan on its views over the next six weeks.

Mr Martin indicated that any fine that might be levied would be comfortably met from the company's $1 billion (€0.8 billion) cash reserves.

Mr Martin said he expected outstanding shareholder litigation against Elan to move forward as soon as the SEC ruling was returned.

He told the meeting that management was continuing to work towards improving Elan's financial situation. As part of this, the firm is is due to complete an auction of assets linked to one of its offshore special purpose vehicles before the end of this month. Mr Martin said Elan would be in a position to comfortably repay debt of close to $500 million due at that time, as well as meeting a similar $390 million milestone commitment due early next year.

Responding to numerous shareholder queries on Antegren, the drug Elan hopes to market for treating both multiple sclerosis (MS) and Crohn's disease, Mr Martin indicated optimism at winning "fast-track" regulatory approval for treating MS within the next few months.

Analysts welcomed a move from the firm to hire six experienced pharmaceutical executives to help support the development and rollout of Antegren and other pipeline products and technologies.

Shares in Elan closed 17 cents stronger at €18.10 last night.