Elan dismisses rumour of merger

SHARES in Elan gained as much as 8% yesterday before the company dismissed weekend reports that it was in merger talks with an American drug firm.

According to a Sunday newspaper, Elan was in preliminary talks with Biogen Idec, the company that is jointly developing a treatment for Multiple Sclerosis with the Irish firm.

Elan shares gained nearly 8% at one stage on the Irish market before the company denied the claims.

“Generally it is not appropriate to comment on market rumours, but on this occasion you can say that we dismissed such speculation,” a spokeswoman for Elan said.

The two firms are heavily involved in the development of Antegren designed principally to slow the progression of multiple sclerosis, but which may also help sufferers of Crohn’s disease and rheumatoid arthritis.

In recent months they have submitted the drug to regulatory authorities in the US and Europe to get the product on the market as soon as possible.

A combination of the two companies could not happen until 2010 as the pair agreed last November (when Biogen merged with Idec) to a seven-year clause that barred either side from taking over the other.

However, that does not rule out a friendly merger.

“We understand the companies are currently finalising the details on how they are going to account for the 50:50 split in Antegren profits given that Biogen Idec is manufacturing the product and will be leading the marketing for the MS indication.

“Elan will lead the marketing for the Crohn’s indication.

“As previously indicated, we believe the companies are on track to jointly announce such details to the market in November,” said Goodbody Stockbroker pharmaceutical analyst Ian Hunter in a research report.

Though a merger or takeover may not be on the agenda now, Elan may look attractive to many pharmaceutical firms in the near future.

The investigation of the company’s accounts, which began more than two-and-a-half years ago, has ended and analysts are not expecting the outcome to have a major impact on the company.

It has also emerged from near bankruptcy and is now looking to be in a much better financial position.

Apart from Antegren, Elan is also working on a potential treatment for Alzheimer’s disease.

If successful this could prove even more lucrative.

According to brokers at the bank Morgan Stanley, sales of Antegren could reach $2 billion a year by 2008.

“But the attractiveness of Elan to other parties is pretty much prevented because Biogen has the right to buy the rights to Antegren in full if Elan is bought by somebody else,” a London-based analyst said.

Elan shares eased back in late trading to end the day on €17.90, a gain of 6%.