Investors revolt to block Elan sale

Investors at Elan aren't going to take it anymore. They're stepping up to block the sale of a stake in the company to a "large pharmaceuticals partner," the Financial Times reports. And they're demanding new directors and new top management at the company.

Seven investors, which together own 37 percent of Elan, met with the company last month to air their grievances. They say Elan has mismanaged the marketing of Tysabri, its multiple sclerosis treatment, and they question CEO Kelly Martin's lack of pharma experience. At a meeting with two directors, they asked that ex-Biogen chief Bill Rohn--who also serves on Elan's board--be named to replace current chairman Kyran McLaughlin.

Among these dissident shareholders is the former president of Abbott Laboratories, Jack Schuler, who wrote to McLaughlin with his complaints (and later posted that letter on his own website). Schuler asked McLaughlin to name experienced directors to the board and to stop the planned sale of a 19 to 25 percent stake in the company. The two directors who met with the dissidents last month replied, saying they would appoint a pharma vet and another director with "commercial experience" to the board before the end of June, and to hire a chief commercial officer within two years.

As you know, the shareholders have been restless at Elan for some time, criticizing the company's overuse of private jets, its far-flung corporate operations and its flagging Tysabri sales. "Elan is a great company that has terrific lifesaving drugs but a management entrenched in arrogance," Schuler told the Financial Times. "They are trying to defend the indefensible."

- read the story in the FT