Plaintiffs appealed the lower court's ruling of dismissal and on September 15, 2008 the United States Court of Appeals issued a mandate withdrawing it.
According to an article dated March 31, 2008, a federal district judge has tossed out a proposed class action against Elan Corp. and its executives brought by investors who claim the Irish company artificially pumped up its stock price by misleading the public about problems connected to its multiple sclerosis drug Tysabri. U.S. District Judge Richard Holwell dismissed the suit Friday but gave the plaintiffs the chance to go back to the drawing board and file an amended complaint against the biotechnology company in the future, according to papers filed in the U.S. District Court for the Southern District of New York. “Because the court finds that plaintiffs have failed to adequately plead both materiality and scienter, we do not reach the remaining arguments offered by defendants in support of their motion to dismiss,” court documents stated. “Defendants' motion is granted, and plaintiffs' complaint is dismissed in its entirety.”
On February 16, 2007, a Consolidated Class Action Complaint was filed. The Defendants responded by filing a motion to dismiss the Consolidated Class Action Complaint. The motion is currently pending before the Court.
On August 20, 2005, the case was transferred from the U.S. District Court for the District of Massachusetts to the Southern District of New York. On August 9, 2005, the Court entered the Memorandum Opinion and Order #91980 signed by U.S. District Judge Richard J. Holwell consolidating all the SDNY actions and appointing the Institutional Investor Group as lead plaintiff and designating Milberg Weiss and Entwistle and Cappucci LLP as co-lead counsel. On February 24, 2006, the Court entered the Order consolidating all the actions and designating 05cv2860 as Lead Case.
The original complaint charges Elan and certain of its officers with violations of the Securities Exchange Act of 1934. Elan is engaged in the development and commercialization of TYSABRI, a vaccine designed to treat patients with multiple sclerosis (MS), slowing the progression of the disease and reducing incidents of relapses. Throughout the Class Period, defendants caused Elan to make a number of positive statements about the status of its clinical trials and the commercial potential of TYSABRI, causing Elan's stock to trade at artificially inflated prices. The Complaint alleges that Elan violated federal securities laws by issuing false or misleading information. Specifically, defendants failed to disclose and misrepresented the following material adverse facts: (i) that TYSABRI(r) (natalizumab), a monoclonal antibody for the treatment of Multiple Sclerosis (``MS''), posed serious immune-system side effects; (ii) that TYSABRI, like other MS drugs, made patients susceptible to progressive multifocal leukoencephalopathy (``PML'') by changing the way certain white blood cells function, thereby allowing PML, a normally dormant virus, to run rampant within the human body; (iii) that defendants knew and/or recklessly disregarded documented facts that MS drugs can cause greater incidents of PML to occur; and (iv) that defendants concealed these facts in order to fast track TYSABRI for FDA approval so that they could reap the financial benefits from the sales of the drug.
Further, on or around February 28, 2005, Elan shocked the market by reporting that they were withdrawing TYSABRI from the market following reports of patients contracting PML, with at least one instance resulting in death. As a result of this announcement, Elan's shares plummeted, declining over 70% to approximately $8 per share on February 28, 2005.