The CEO and deputy chairman of troubled Irish drugs giant Elan have both resigned ahead of a Tuesday, July 9, meeting at which the company was expected to drastically cut its 2002 earnings forecast.
The news that Donal Geaney and Thomas Lynch had left the company sent Elan’s share price up from last week’s low of $1.31 to $2.36 per share, indicating that the resignations had gone some way to increase investor confidence in the company.
Geaney has been criticized for failing to adequately restore confidence in Elan since it hit trouble in January.
At one time, Elan’s shares traded at $66.00, until January, when a Wall Street Journal article compared its accounting to that of collapsed energy giant Enron. Last week, the share price fell by almost 45 percent alone.
Garo Armen, a board member since 1994 and chairman and chief executive of Antigenics Inc., has been appointed Elan’s interim chairman until a new CEO is recruited.
Analysts had predicted that the company would post reduced earnings after the company confirmed last week that it had sold the royalty rights to some of its top-selling drugs, effectively giving up substantial future revenues.
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Elan was to go ahead with a conference call on Tuesday with investors, where it is expected to make the reduced adjustment to its earnings. The company is also facing a U.S. Securities and Exchange Commission investigation, and the conference call is expected to see investors grilling the board.
The Financial Times quoted people close to the company as saying that Elan won’t be able to meet its earnings goal of $1.55 to $1.65 a share it set at the beginning of the year, but Geaney’s departure may provide the boost of confidence that Elan’s investors have been looking for.
Once Ireland’s largest firm by market value, Elan is now worth around euro 700 million. A year ago it was worth euro 22 billion.