Elan has approximately 2000 employees worldwide and began operations in Ireland in 1969. Kelly Martin was appointed a Director of Elan in February 2003 following his appointment as President and Chief Executive Officer. He was formerly President of the International Private Client Group and a member of the executive management and operating committee of Merrill Lynch & Co., Inc. He spent over 20 years at Merrill Lynch & Co., Inc. in a broad array of operating and executive responsibilities on a global basis.

Black Monday for investors in Irish drugs firm Elan and US biotech company Biogen Idec, ended with Elan shares crashing almost 70% to $8 and Bioglen stock fallling 43% to $28.63. The fall in Dublin was 68.62% to €6.37 on a volume of 2,224,508.

The withdrawal of Tysabri, which was approved by the US FDA last November, as a medication for patients suffering from multiple sclerosis, is a hammer blow to Elan in particular. It was announced on Monday that two patients who had been on the drug in trials -- plus another medication marketed by Biogen -- for more than two years developed a rare brain disorder called progressive multifocal leukoencephalopathy (PML). One died.

The dramatic developments on Monday are the second near-death experience for Elan, which saw its market value fall 90% in early 2002, following poor clinical results for a key Alzheimer's drug and US charges of accounting fraud. Elan had a value of $17bn in 2001 and accounted for 20% of the market capitalisation of the Irish Stock Exchange.

Elan was recovering from its 2002 woes and had forecasted a return to profitability by the end of 2006. However, much was pinned on the success of Tysabri which was forecast to generate sales of up to $3 billion for Elan and its US partner in the development of the drug, Biogen.

In a conference call with analysts and journalists on Monday, Biogen executives made it clear that the trials have been suspended, not ended. Further analysis of side-effect risks vs. benefits, they said, may make it possible for Tysabri to be reintroduced. The scientists need to ascertain if the cases of PML were related to Tysabri, or to the combination of the product with another drug. However, there will be no short-term remedies.  Biogen's sales for 2004 jumped from $679 million to $2.2 billion, mainly on the strength of its other multiple sclerosis drug, Avonex, and a treatment for non-Hodgkin's lymphoma, Rituxan. The company reported a profit of $518 million, up 20% from 2003.

Elan's future is much more uncertain. It recently won approval for Prialt, a pain reliever. However, analysts say that  serious side effects make it unlikely the drug will ever be a blockbuster.

Elan chief executive Kelly Martin said on Monday that the suspension of Tysabri was "a temporary setback" and one that the company could work through. It has $1.5 billion in cash with repayment of debt moved out to 2008.

As to Kelly Martin's optimism that the multiple sclerosis drug may be back in the market in the third quarter, if there are no more adverse findings, investors will likely remain very cautious following two dramatic share value collapses in the space of three years.

On his appointment in 2003, Kelly Martin told Business Week magazine that Elan "is a great company scientifically that was overengineered financially." The "overengineering" included 55 joint ventures, two off-balance-sheet partnerships, and $1.5 billion in convertible bonds that allowed Elan to shift R&D costs off the balance sheet and acquire new products.

Related:

Elan settles SEC fraud claims and pays $15 million fine

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Elan forecasts return to profitability by end 2006