Last Updated Feb 17, 2009 4:57 PM EST
The events cap a dramatic few weeks with the company, to say the least.
Elan chairman Kyran McLaughlin, CFO Shane Cook and a bunch of Elan's board members are poised to become even richer than before, the Irish Independent reported. Here's the nut:
Last week, chairman McLaughlin was awarded 11,250 shares worth close to â‚¬66,000. Non-executive directors including CRH chairman Kieran McGowan, Anglo Irish Bank chairman Donal O'Connor and Paddy Power [a gambling company] boss Patrick Kennedy were all awarded 7,500 shares each, these are worth about â‚¬45,000. These shares will vest when the directors retire.BNET noted recently that the company is exploring the sale of 19 percent or more of itself in a "strategic review." The company -- more of a soap opera, really -- has attracted hostility from Schuler, who recently succeeded in getting two directors on Elan's board persuading Elan to appoint two new board members, but not the ones he wanted. The company is "entrenched in arrogance," Schuler believes -- and this self-dealing payout would seem to confirm that.
Shane Cooke was awarded almost â‚¬730,000 worth of options and restricted shares.
Company secretary Liam Daniel was awarded almost â‚¬530,000 worth of options and restricted shares.
Here's Elan's Feb. 6 response to Schuler. Note this scary section in the middle of the letter:
De-Risking the Balance Sheet Our Balance Sheet has been significantly de-risked in recent years. Over 50 off-balance sheet arrangements have been unwound in the last 5/6 years which has simplified our structure. Additionally we have taken our debt down from $4.5 bn in 2001 to $1.7 bn today..."50 off-balance sheet arrangements"? Weren't those the things collapsed Enron? Yes, they were.
Schuler was not mollified. He wrote a letter of his own. Read the whole thing here. Aside from the wonderful gossipy bits ("none of the CEO's top 20 executives, whom your CEO personally hired, have any relevant pharmaceutical marketing experience"), readers should note the effect of the Pfizer-Wyeth takeover on Elan. It would give Pfizer control of Wyeth's stake in Elan's bapineuzumab, and Pfizer may then choose to kill bapineuzumab in favor of its own projects. Here's a digest:
LETTER TO ELAN - FEBRUARY 8, 2009Hat tip to IguanaBio.
Dear Mr. McLaughlin:
# Your CEO has almost completely surrendered the promotion of Tysabri to Biogen, despite an inherent conflict with their drug Avonex, the current market leader in multiple sclerosis and the drug most threatened by Tysabri's success. # Last year your CEO announced with great fanfare the creation of an Elan sales force to promote Tysabri for the Crohn's disease indication. Less than a year later, he disbanded this sales force after investors pointed out that it was a failure. Three years ago, your CEO indicated that Elan's pain management drug, PRIALT, would achieve annual sales of $150 to $250 million. In our eyes, the promotion of PRIALT, an excellent drug, is an absolute failure. Currently, sales are less than $20 million annually, which clearly exemplifies your CEO's lack of understanding of basic pharmaceutical marketing. Based on the above referenced facts and despite an obvious need for such knowledge, none of the CEO's top 20 executives, whom your CEO personally hired, have any relevant pharmaceutical marketing experience. The Pfizer/Wyeth merger is a threat to Alzheimer patients and Elan, and this should be opposed by Elan: * Pfizer currently has six Alzheimer drugs under development and one on the market, while Wyeth has four of Elan's Alzheimer drugs and five Alzheimer drugs of its own in development. If this merger materializes, Pfizer will control 16 Alzheimer drugs, which represents a majority of all Alzheimer drugs currently in clinical development and on the market. * In addition, Pfizer would control a great deal of the intellectual property in this area, creating a virtual monopoly for itself. If allowed to control all these drugs, Pfizer would undoubtedly be forced to determine which of these compounds would receive priority in clinical development and which would be slowed down. As a result, Pfizer would likely favor those drugs in which it holds a 100% interest rather than the Elan drugs in which it holds only a 50% interest. Once again, Elan would be in the same position with Pfizer as it is with Biogen.