Elan shares have risen by 8 per cent today following the resignation this morning of Mr Donal Geaney as the company's chief executive and chairman. At 3 p.m. Elan shares were reading 20 cents higher at €2.55 on the Dublin market.
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Mr Donal Geaney
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Vice chairman Mr Thomas Lynch also quit, Elan said in a statement this morning. Mr Lynch and Mr Geaney will still act as advisers, to support a new five-man executive committee, designed to implement the company's restructuring plan, Elan said.
Mr Garo Armen, chief executive of Antigenics, has been elected Elan's new chairman, the statement added.
This morning’s announcement came as no surprise to investors following the recent troubles at the company. Elan is facing a US Securities and Exchange Commission investigation of its accounts and cheaper, generic competition for its best-selling drug.
Last week, Elan said it may take a write-down of as much as €638 million due to a drop in the value of biotech investments.
Brokers said today that the company needs to make a number of key decisions to shore up investor confidence in the company.
According to Mr David Marshall of NCB stockbrokers, in the near term the company needs to focus on identifying a suitable chief executive with relevant experience in distressed company situations and to focus on resolving the SEC investigation.
It also needs to give full disclosure about the transactions with Pharma Marketing and Autoimmune and identify the investors in these ventures and cut costs radically as well as rationalising the investment portfolio and realise cash.
Mr Marshall added that Elan shares may enjoy a short term bounce on this morning’s development. However he added that ultimately the value of the company will be determined by the degree to which the sum of the parts is impaired by any further damaging revelations.
Elan is due to host a conference call this afternoon with analysts and journalists in an attempt to give guidance to the market.