Elan’s ‘bold’ move adds to takeover speculation

Elan is to hive off its drug discovery division Neotope Biosciences and continue as a profitable standalone company — a move which has heightened speculation that it is trying to position itself as a takeover target.

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.