The Irish biotechnology company’s management has hailed the move — which is still dependent on shareholder and bondholder approval — as being “a bold and logical strategic step” aimed at lowering its operating costs, doubling earnings and delivering sustainable net profitability and shareholder value.
The move — which should be concluded by the end of the year — will leave Elan with its growth-orientated assets led by its multiple sclerosis treatment, Tysabri. Management said, yesterday, that it should result in the company generating net income of $250m next year with already forecast EBITDA of $200m for 2012, doubling by the end of 2013. Earnings of $1 per share is the target for 2015. The move should also lower operating expenses by over $100m to $300m.
“All of our previous actions — including, most notably, the separation of the Elan Drug Technologies business and its merger with Alkermes; as well as the establishment of Janssen AI with Johnson & Johnson and in a sharing of the risk/reward around the alzheimer’s immunotherapy programme — have been designed to improve the risk/return profile of the company, cluster businesses and assets logically for shareholders,” remarked Elan’s chief executive Kelly Martin.
He said the Neotope transaction was “a natural progression and final step to [Elan] becoming a company that generates both profits and growth to the benefit of stakeholders.”
Elan will now focus on growing patient access to Tysabri — which currently treats nearly 70,000 global MS patients and is adding around 10,000 per year — continuing its alzheimer’s work and registering its ELND005 molecule for a number of treatments.
The company is also looking at broadening Tysabri’s scope to other conditions; something which Elan hopes tofinalise with its US partner on the drug, Biogen Idec, before the end of this year.
Meanwhile, Neotope — which will be headed up by former Elan senior executives Dale Schenk and Lars Ekman — will operate as a totally separate business, with a US share listing; either via the Nasdaq or the New York Stock Exchange. However, Elan will pump between $120m and $130m into it — effectively funding Neotope’s first 30 months as a separate entity — and will keep a 14%-18% long-term equity stake.
It is also hoped that Neotope can discover three investigational new drugs by 2015.