A Look at What Those Elan Releases Under SEC Probe Actually Say

Johnson & Johnson must be loving their new deal with Elan. Remember, this was the deal in which they paid $1.4 billion for a stake in the company, including $500 million for its Alzheimer's drugs, such as bapineuzumab, and still didn't come away with Tysabri, the MS wonder drug.

Having lost Tysabri, J&J now finds that its new partner is under investigation by the SEC regarding its disclosures on both drugs. Life in bed with Elan isn't dull, you have to admit that.

Given that the feds just convicted former InterMune CEO W. Scott Harkonen for writing a misleading press release describing clinical results, and Pfizer just paid $2.3 billion to settle charges that included an illegal off-label press release, let's take a look at the bapi release that has the SEC so curious.

It was published on July 29, 2008. The highlights:

  • Safety and efficacy results support design of ongoing global Phase 3 program
  • Pre-specified efficacy analysis did not reach significance in the total population
"This study was limited in its size, design and goals," said Dr. Gilman, "but if the findings seen in these post-hoc analyses are replicated in the global Phase 3 program, it would be a validation of the amyloid hypothesis and could change how physicians approach the treatment of Alzheimer's disease."

Elan and Wyeth believe that the safety and efficacy findings from this Phase 2 trial of bapineuzumab in patients with mild-to-moderate Alzheimer's disease support the design of the ongoing global Phase 3 program

Was anything wrong with the release? It's pretty confusing for investors. The headlines is good news: safety and efficacy support a Phase III trial. But then it says the efficacy results weren't statistically significant. It concludes by saying that this disappointing data means the company should press on with bapi regardless.

Elan shares dropped 32 percent on that news. As the Wall Street Journal points out:

The full data presentation for bapineuzumab disappointed many investors, who felt it was less impressive than the preliminary findings Wyeth and Elan had included in a June 2008 press release.
The Tysabri release looks less puzzling at first blush. A couple of days later, on July 31, the company held a conference to reveal that two cases of a deadly brain infection linked to Tysabri had emerged. Shares plunged 46 percent on that.

This is pure speculation, but on the surface it appears that the issue with the bapi release seems to be whether it's misleading to investors. As the Tysabri release contained nothing but bad news, the issue there could be whether it was made fast enough, or whether the company made too little of it.