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September 8, 2010 3:19 am
Elan, the Irish drug company, stepped up an unusual public defence against a catalogue of alleged conflicts of interest and corporate governance failings.
In a letter to shareholders, Kelly Martin, chief executive, confirmed connections that he and other directors had with external companies including some that did business with Elan, while arguing that they did not act against shareholders’ interests.
He accused Ib Sonderby, a Danish investor in Elan, of continuing “deliberately to spread misinformation and recycle issues that have been previously addressed”.
Mr Martin confirmed a report on Mr Sonderby’s blog that he had helped establish and was a non-executive director until March of Kinsale Capital Management, an Irish-based hedge fund, but said he had no “day-to-day involvement”, received no fees for his role and that the fund had not invested in Elan.
He said Kyran McLaughlin, Elan’s chairman, was also deputy chairman of J&E Davy, the Irish stockbroking group, which holds shares for more than 200 clients in Azur, a company that signed a licensing deal with Elan. But he said the brokerage itself held no Azur shares and Mr McLaughlin had no management role or influence on investment decisions.
He said three Elan directors held between them “significantly less than 1 per cent” of Azur, and they recused themselves from board discussions on the sale to Azur of Elan’s US Prialt after a “rigorous” process involving scrutiny of 36 bids.
He said Shane Cooke, Elan chief financial officer, was the brother of the then chief operating officer of Amarin, which signed “a small licensing agreement” for its drug lorazepam, later bought back by Elan’s EDT division for $700,000. But he said his CFO was not involved in the transaction.
Mr Martin confirmed that Elan had hired McKenna, a US law firm, to audit its corporate governance, while stressing that proper disclosures were made about the events he listed including terms of a recapitalisation deal last year with Johnson & Johnson.
Two independent board directors have demanded a separate audit. Mr Martin called that “regrettable” and said he had sought an injunction so they could not “hijack” his own review.
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