Ireland’s Elan Corporation has agreed to pay a $15 million dollar civil penalty to settle a US Securities and Exchange Commission investigation into its accounting practices that has been hanging over its head for the past three years [[08/02/02b]].
Elan’s fortunes took a turn for the worse and its share price went into a tailspin back in 2002 when allegations surfaced that the company had reported favourable financial statements, but concealed certain information that meant its stock traded as high as $65 dollars [[07/02/02c]]. The firm teetered on the brink of bankruptcy as it faced the prospect of defaulting on millions of dollars worth of debt repayment [[27/06/03a]]. However, uUnder the agreement reached with the SEC, Elan has neither admitted nor denied the allegations.
The move had not been unexpected, as the company had revealed late last year that it was on the verge of settling the claims [[26/10/04a]]. The firm has already set aside a $55 million reserve to cover its liability in the case. The terms of the settlement remain subject to court approval, and could also see Elan stumping up $75 million – including $35 million to be paid by its insurers – to settle a plethora of class action lawsuits prompted by Elan’s 2002 share price collapse in the wake of the SEC investigation. A hearing has been scheduled for February 18, 2005, when the court will consider final approval of the settlement.
The firm is now looking to the future, and yesterday reiterated that it expected to return to profit by 2006 [[08/02/05a]]. Key to its turnaround is the multiple sclerosis offering, Tysabri (natalizumab), which is already exceeding expectations and looks set to become the market-leading MS treatment.