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Judge Orders Elan CEO Submit to Interrogation by Biogen Lawyers

Elan's spat with Biogen over the rights to Tysabri seems likely to end up with Elan CEO Kelly Martin facing a deposition with Biogen's lawyers, according to papers filed in litigation between the two companies.

The case is about whether Elan's financing deal with Johnson & Johnson breaks a joint venture agreement between Elan and Biogen over Tysabri, their MS drug. Biogen asserts that the deal breaks the agreement because it occurred without Biogen's consent, and Elan must now forfeit its rights in the drug. Elan sued Biogen to prevent that forfeiture.

Arguments in the case were to be heard today, but the judge has given the parties extra time to investigate each other and file motions. Arguments are now set for Sept. 10 at 10 a.m. The judge's order moving that date also contains this requirement:

Elan will produce Elan's CEO, Kelly Martin, for deposition upon 48 hours notice for deposition at the New York offices for counsel for Biogen.
In addition, Biogen wants all Elan's papers and records regarding the J&J deal, and copies of all communications between Elan and J&J reagrding Tysabri. Biogen's intent seems to be to put together a detailed timeline of what Martin knew, when he knew it, and whether that constitutes a breach of their agreement. The company is clearly hoping some kind of embarrassing smoking gun will emerge, sealing the case in their favor.

That agreement seems simple but is in fact subtly complicated. It states that neither party may assign "any right or obligation" "in whole or part" to another company without the other's written consent. If it does so, it must be part of a change in control.

Elan is arguing that the deal is merely an option to finance an acquisition if Biogen gives up its right to the drug, and would therefore only kick in after Elan's agreement with Biogen was ended. Plus, the deal only gives J&J a minority stake in Elan and is therefore not a change of control.