Elan Corp. Securities Litigation
Berger Montague announced on October 27, 2008 that a class action lawsuit was filed in the United States District Court of New York on behalf of all purchasers of American Depository Shares (evidenced by American Depository Receipts) of Elan Corporation PLC (“Elan” or the “Company”) and all purchasers of options to purchase Elan securities during the period of June 17, 2008 through July 29, 2008 (the “Class Period”) charging Elan and certain of its principal officers and directors with violations of the federal securities laws.
The complaint alleges that the Defendants materially misrepresented the facts about the results of a clinical study of a four ascending doses of a drug (bapineuzumab or AAB-001) that the Company and Wyeth were testing as a treatment for mild to moderate Alzheimer’s disease.
The complaint alleges that the Defendants issued materially false and misleading representations stating that the 18 month clinical study of AAB-001, the Elan-Wyeth drug, produced “statistically significant and clinically meaningful benefits” in the 40-70% of patients with mild to moderate Alzheimer’s disease who do not carry the gene that predisposes a person to Alzheimer’s disease, as measured by four neuropsychological, mental and other Alzheimer’s disease assessment scales.
These representations were materially misleading due to the facts disclosed at a medical conference on July 29, 2008, as follows:
- Typically, if a drug is effective higher doses of a drug correspond with increased efficacy. In the study of AAB-001 that did not occur. Indeed, patients did not even show a consistent pattern of benefit across the four different dosages that were administered in the trial.
- The lowest doses of AAB-001 worked better on some measures of cognition and function, while higher doses worked better on others, and sometimes doses in the middle produced worse results than placebo. This made the results appear random, rather than drug-related.
- For nearly a year into the 18-month trial, AAB-001 and placebo patients were both losing cognition at the same rate. The lower rate in the drug-treated patients came about only because placebo patients suffered a steep loss of cognition at the end of the study. An effective drug would be expected to manifest its effect at an earlier stage in time.
- The non-gene carrier placebo patients loss cognition at the rate of 11 points on the scale used to measure cognition, compared with a 7 point loss of cognition by placebo patients in a much larger trial recorded publicly, and lower rates in other 18-month trials, which suggests that the condition of the placebo patients may have been more severe than the norm in such trials.
- The baseline score for the Mini Mental State Examination score for non-carrier placebo patients was 1.6 points lower than the score for the AAB-001 patients, a statistically significant difference. Thus, the condition of the placebo patients was worse than that of the AAB-001 patients at the state of the study, which indicated a likelihood that the placebo patients would deteriorate more rapidly than those treated with the drug.
- Twelve patients in the study treated with AAB-001 developed a potentially dangerous accumulation of fluid in the brain known as vasogenic edema. All of these cases resolved favorably, however, this condition was detected only by subjecting patients to numerous MRI scans. In the real world, Alzheimer’s patients would not be monitored this closely, so that vasogenic edema remains an issue with respect to the drug. The condition was found in patients receiving the high dose of the drug, indicating that the high dose was unlikely to be a dose that could receive regulatory approval.
When these facts were revealed on July 29, 2008, the market price of Elan ADSs fell from a closing price of $33.75 on July 29th, to a closing price of $20.99 on July 20, 2008, a decline of $13.76 per ADS, on extraordinary volume of almost 53 million ADSs.
As reported by The Wall Street Journal, Dr. Ronald Petersen, a neurologist at the Mayo Clinic and Chairman of the Medical and Scientific Advisory Counsel of Alzheimer’s Association, the group sponsoring the July 29th Alzheimer’s meeting at which the data from the study of AAB-001 was presented, commented that “I can’t tell if the compound’s efficacious or not at this point in time.” The Wall Street Journal further reported the comments of experts that it was not clear why the drug seemed to work in some people but not others, and their concern that the more ways the data are sliced, the more likely it was that positive results would result from chance. In summary, The Wall Street Journal stated:
“[T]he full findings for the drug bapineuzumab, remain inconclusive and may underwhelm many scientific experts and investors.”