Elan Corporation’s share price took another knocking yesterday after a class action lawsuit was filed in Massachusetts on behalf of the firm’s shareholders in connection with the withdrawal of the highly-touted multiple sclerosis drug, Tysabri (natalizumab), after it was linked to two cases of a rare central nervous system disease [[01/03/05a]].
The suit alleges that Elan “failed to disclose and misrepresented… material adverse facts, which were known to defendants or recklessly disregarded by them.” Specifically, it claims that the company knew that Tysabri posed serious immune-system side effects and made patients susceptible to the condition, known as progressive multifocal leukoencephalopathy, or PML. It also alleges that Elan concealed the information so that it could win fast-track US Food and Drug Administration approval for the product and “could reap the financial benefits from the sales of the drug.”
The suit, which is being filed on behalf of investors who bought Elan’s shares between February 18 and 25, 2005, inclusive, notes that Elan’s share price plummeted more than 70% after the firm, and partner Biogen Idec, withdrew Tysabri. A similar lawsuit has already been filed against Biogen Idec [[04/03/05a]].