Elan Corporation: 1969-2013

Elan has announced that it will spin off Neotope Biosciences as a repository of all its preclinical/discovery research–devoted to targeting rogue proteins (amyloid, tau, synuclein) in the treatment of neurodegeneration. Elan’s longterm CSO, Dale Schenk, is the CEO; Elan intends to fund the to-be-public company with $120-130 million (two years of cash), retaining an equity stake. This will leave Elan comprising the following:
1) The 50% of Tysabri not already owned by Biogen-Idec.
2) ELND-005, Alzheimer’s therapeutic licensed from Transition Therapeutics. Elan has been trying to outlicense this program for over a year, without success.
3) A stake in the Janssen/Pfizer  vaccine programs for Alzheimer’s. With bapineuzemab’s failure, the perceived value of this program has never been lower.
4) Equity stakes in Alkermes and Proteostasis Therapeutics–Elan recently terminated their partnership with Proteostasis.

Or to put it more succinctly: The 50% of Tysabri not already owned by Biogen-Idec.

Last winter, Elan announced that Kelly Martin’s planned departure from the CEO role would be delayed until bapineuzemab’s results were in. Now that they are, there is no mention of CEO succession, because Martin is carving off all non-Tysabri assets that have any burn or perceived value  attached to them, preparing to sell Elan. Biogen-Idec would not want them, they have a very substantial neurodegeneration platform of their own: Neotope’s pipeline would be, at best, redundant and a distraction from the main event, getting maximum value for demi-Tysabri. Neotope will be spun off by the end of 2012. Elan will cease to exist as a independent entity before the end of 2013. There is no need for a succession plan.
Addendum: An astute market observer just commented to us off-line that Biogen-Idec would not be in a hurry to acquire Elan’s half of Tysabri, particularly for what Elan thinks it’s worth. We agree, which means that Elan will end up accepting less than they may currently expect to get:  Tysabri is a depreciating asset, and they will not want to wait to see how BG-12 does, because Tysabri’s rate of decline will likely hasten. Elan can’t effectively shop Tysabri around to other buyers, since Biogen-Idec has pre-emptive acqusition rights (who wants to spend time just to boost Biogen-Idec’s cost?), and they have a lame duck CEO. Elan shareholders anticipating a large return on Tysabri may have to ratchet back their expectations significantly, because Biogen-Idec does not have to do anything, there will be much more pressure on Elan to complete the transaction.

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One Response to Elan Corporation: 1969-2013

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