Washington Editor

Wall Street didn't look too poorly Monday on Dublin-based Elan Corp. plc's statement that it intends to narrow its focus to three therapeutic areas, and to strengthen its corporate governance practice.

Elan's stock (NYSE: ELN) closed Monday at $7.97, down 5 cents.

The company has faced a series of difficulties this year including an investigation into its accounting practices by the Securities and Exchange Commission and suspension of clinical dosing for an Alzheimer's drug being developed in conjunction with Wyeth-Ayerst Laboratories, of Radnor, Pa. At the beginning of the year, the company's stock was trading at more than $40. (See BioWorld Today, Feb. 11, 2002.)

In a prepared statement released Monday, Donal Geaney, company chairman and CEO, said Elan recognizes that it faces a number of "significant challenges in the short term, including regaining its credibility with shareholders and other stakeholders."

The first part of its multipronged approach toward regaining that credibility has Elan placing development efforts in neurology, pain management and autoimmune diseases.

However, the announcement does not indicate that any of Elan's 4,500 employees across the globe will lose their jobs, Max Gershenoff, a spokesman for Elan, told BioWorld Today. He noted Elan has not announced layoffs, nor has it specifically stated which projects will be dropped, "but we are refocusing our efforts," he said.

"In less than 10 years, Elan has acquired over 25 sites worldwide and as part of this restructuring, the number of sites will be reduced significantly," Gershenoff said. "But we haven't given out the number of sites that will be reduced. I would point out that many of these sites are ancillary, and are lightly staffed. So the simple answer is, we plan to dispose of non-strategic assets and businesses, but we have no current plans for significant layoffs."

The company will open a new business unit called Elan Enterprises that will be charged with divesting the non-strategic businesses and assets worldwide in order to streamline operations. Meanwhile, the division also will focus on "optimizing the value of Elan's business ventures," the company said, possibly through seeking marketing partners.

Its activities in neurology and pain management will include discovery, development, manufacturing and marketing of novel therapies for the treatment for disorders of the nervous system, including diseases such as Alzheimer's, Parkinson's and epilepsy.

In the autoimmune area, Elan will study novel treatments for disorders such as multiple sclerosis, Crohn's disease and rheumatoid arthritis.

The company said it will pursue the acquisition of in-market products with sales potential of greater than $100 million for the U.S. market and $50 million for European markets. And, in order to enhance its corporate governance practices, Elan's board of directors tapped former Pennsylvania Gov. Richard Thornburgh to fill the newly created position of lead independent director. Thornburgh has served as U.S. attorney general and under-secretary general of the United Nations.

As lead independent director and chair of the newly formed nominating committee, Thornburgh will lead board functions relating to the company's corporate governance polices.

Several days before Monday's announcement, Elan and partners Novartis Pharmaceuticals Corp., of East Hanover, N.J., and Celgene Corp., of Warren, N.J., said the FDA cleared Ritalin LA (methylphenidate HCI) extended-release capsules for the treatment of attention-deficit/hyperactivity disorder. In March, Elan received FDA approval for Avinza (morphine sulfate extended-release, formerly Morphelan), a once-daily capsule for chronic, moderate-to-severe pain in people who need continuous, around-the-clock therapy for an extended period of time.

At its July 31 annual meeting, Elan management will discuss more details surrounding the new action plan.