Chief downplays talk of ‘dolling-up’ business

Management at Irish drug company Elan has downplayed talk of the business being “dolled-up” as a potential acquisition target.

“If someone thinks we’re an attractive business model, then so be it. We don’t worry about being seen as a takeover target. We worry about controlling what we can control and running the business.”

So said Elan’s chief executive, Kelly Martin, yesterday, on a media conference call formally announcing the company’s plan to separate its drug discovery business from its core growth-orientated commercial drug unit.

The call was dominated by questions surrounding the timing of the announcement — just a week after a second failed trial for the Alzheimer’s focused Bapineuzumab drug — and the thinking behind it.

“We hope this will make us a very attractive company in terms of shareholder value. Takeovers happen all the time, around the world, for different reasons. But we don’t wake up worrying if we’re a takeover target. Our job is to create a company capable of growing value for our shareholders,” Mr Martin said. He added that the spinning-off of Neotope Biosciences into an independent, standalone company is the result of a 12-18 month board discussion/thought process.

“This is, unequivocally, not a reaction to Bapineuzumab. Elan is built to move forward with or without Bapineuzumab. The trouble with Elan has been having too much debt funding, too many long-term assets. There’s always been a mismatch between the P&L and creating long-term value,” Mr Martin said.

Much of Elan’s focus will now be on its revenue generating multiple sclerosis drug, Tysabri. Amid speculation that the Neotope move might make Elan more of an attractive buy option for Biogen Idec — the Irish company’s commercial partner on Tysabri — the two companies are looking at ways of expanding the use of the drug for more treatments. A further bonus is the news that Tysabri’s patent protection deadline has been extended by three years, pushing exclusivity out to 2020.

Another topic of discussion, yesterday, was Mr Martin’s future with Elan. He was due to stand aside this year but agreed to remain until the end of the Bapineuzumab trials.

His response: “There have been zero discussions regarding a new chief executive.”

Elan’s share price was back on the climb yesterday, up by nearly 5% at €9.50, with analysts hailing yesterday’s news as “a logical step in de-risking the business”.

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