Elan seeks to rebuild its asset portfolio

Elan has around $2 billion (€1.54bn) to spend on investments as it looks to rebuild its asset portfolio following the sale of its headline asset and revenue generator Tysabri.

The company’s management told analysts yesterday that it has held a number of discussions with companies and will finalise some of these discussions in the near future. The Dublin-based biotechnology firm has been looking at a number of options ranging from asset purchases, investments and/or company acquisitions.

The money — in cash and cash equivalents — is largely as a result of the sale of its 50% stake in leading multiple sclerosis drug, Tysabri, and a $1bn share buyback programme and gives Elan “substantial capacity to execute on transactions to diversify our business and grow shareholder value”.

“The completion of the Tysabri transaction, earlier this month, followed by the $1bn share buyback and the retirement of our bonds, have collectively transformed our capital structure and provide the platform to transform our business structure. As a result of these transactions, we have eliminated our debt and have reduced our sharecount by approximately 15%,” the company’s chief financial officer, Nigel Clerkin, said.

Mr Clerkin was speaking on the back of the publication of Elan’s first quarter financial results, which showed a near $2m (€1.54m) annualised lowering in net losses — from $74.7m to $72.8m for the three months to the end of March.

Regarding potential investments, chief executive Kelly Martin said that management is confident that the discussions engaged in over the past year, with many companies around the world, will deliver significant value-creating opportunities for Elan and its shareholders.

On yesterday’s analyst conference call, management suggested that being in an offer period — with Royalty Pharma still potentially circling the company — wouldn’t stop Elan progressing on a potential deal, although it would have to put any such transaction to shareholders for approval.

Royalty is currently in a 28-day period in which it has to lodge a formal offer document with regard to a takeover of Elan, after which the Irish firm’s shareholders will have a 60-day window of reply. Earlier this week, Elan rejected Royalty’s revised approach — in the wake of Elan’s approved share buyback — saying it had substantially and grossly undervalued the company’s prospects.