Shares in Elan suffered further falls today after €7 billion was wiped off the value of the company yesterday. After falling as much as 16% earlier this morning, the stock was down marginally this afternoon.
The fall follows the announcement yesterday that the drugs firm and its partner Biogen were suspending sales of their much heralded multiple sclerosis drug Tysabri after a patient died after being treated with Tysabri in combination with Biogen's MS drug Avonex.
Commenting today Elan CEO Kelly Martin said: 'Our recent actions have been taken in order to further investigate the matter, while responsibly keeping physicians and patients informed'.
He said that Elan 's home is Ireland, and that the company is fully committed to its 550 employees in Dublin and Athlone, with a current recruitment drive for an additional 60 people for the Athlone business.
Mr Martin confirmed that Elan has strong cash reserves and a solid revenue base from its other programs and businesses.
The shares had plunged 69% yesterday, dragging the ISEQ index down almost 6%.
It has also emerged that many pension funds have a heavy exposure to Elan as the drug company represented almost 10% of the Irish Stock Market. Pension funds are estimated to have lost a total of €700m as a result of the collapse. In many cases this would represent over 1% of the total of their value.
This is an unwelcome development at a time when many funds are already in the red. The latest estimate says the top ten companies in Ireland have total deficits of €3 billion.
Elan and Biogen said yesterday that there was one fatal, confirmed case and one suspected case of progressive multifocal leukoencephalopathy, a rare and often fatal disease of the central nervous system.
The companies have also suspended dosing in all clinical trials of the drug. The action has been taken in consultation with the US Food and Drug Administration, the two companies said.
Authorities in the US are now going to start testing the 3,000 people on Tysabri. That process will take up to three months. It is unlikely there will be any positive news from Elan until those checks are finished and as a result, the share price is not expected to recover for some time.
Tysabri, which was approved in the US just last November, was widely expected to become the world's leading multiple sclerosis treatment and was the driving force behind a revitalisation of Elan and a new growth spurt for Biogen, whose existing MS drug Avonex, faces increased competition.
Tysabri has yet to be approved by EU regulators and only a handful of MS sufferers in Ireland have been prescribed the drug.
However, Smith Barney today raised its ratings on Biogen and Elan saying that yesterday's market reaction to the withdrawal of Tysabri was overdone. The financial services firm raised Biogen to "buy" from "hold" and raised Elan to "hold" from "sell".
