A US LAW firm is taking a class action suit against Irish pharmaceutical developer Elan, claiming that a deal it did with multinational Johnson & Johnson caused shareholders to lose money.
In 2009, Johnson & Johnson agreed to pay Elan $1 billion for an 18 per cent share in the group and a 50.1 per cent stake in a joint venture that would develop the Irish company’s Alzheimer’s immunotherapy programme.
However, that deal sparked a legal row with Biogen, Elan’s partner on its multiple sclerosis treatment, Tysabri. This forced a renegotiation of the Johnson & Johnson agreement and the sale price was reduced by $115 million from the original $1 billion.
Shepherd, Finkelman, Miller Shah has filed papers in the New York district court seeking the right to take a class action against Elan and a number of executives.
The Californian firm claims that anyone who bought shares between July 2nd and August 5th lost money because the original announcement of the Johnson Johnson deal artificially inflated Elan’s stock price, while the subsequent problems caused it to fall sharply.
The claim is based on the lawyers’ assertion that company and executives Kelly Martin and Shane Cooke, failed to disclose that the original Johnson & Johnson deal breached the terms of its collaboration agreement with Biogen.
The legal firm is seeking to recruit anyone who bought Elan American Depository Stock (ADS) during the period to act as lead claimant in the suit.
Elan said yesterday it would defend the action vigorously and that it was completely without merit.
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