Donal Geaney and Tom Lynch, chairman/CEO and vice-chairman, respectively, of the troubled Irish pharma company Elan, resigned
following intense pressure from investors. Their departure came shortly after the company's credit rating was cut to junk
bond status by Standard & Poor. Elan has had a difficult couple of months, with scrutiny of its accounting methods and cash
position causing the share price to plummet in both Dublin and New York. The price had fallen by more than 90 percent since
January but recovered slightly following news of the resignations.
The US Securities and Exchange commission is investigating Elan's accounting policies, particularly the use of off-balance
sheet vehicles for research joint ventures. The company has admitted that more transparent accounting would have made last
year's reported profits substantially lower.
In an attempt to calm the markets, in mid-June Elan announced a range of organizational changes, eliminating divisional structures
in the process. Its future focus will be on the three core therapeutic areas of neurology, pain management, and autoimmune
diseases. The company also said it will eliminate 500 jobs and has abandoned plans to expand into Japan.
But those measures failed to reassure investors, who remain concerned about a looming cash crisis, exemplified by Elan's recent
sale of financial assets-the royalty rights to some of its products-at a loss to fund debt payments. A pending US lawsuit
from shareholders, who claim the accounting practices inflated revenues, has also undermined investor confidence.