Royalty puts Elan under pressure

Royalty Pharma has urged the board of Irish biotech firm Elan to engage it in takeover talks immediately.

The call was made yesterday, as Elan shareholders approved only one of four resolutions put to them at the company’s EGM, effectively lapsing Royalty’s previously tabled interest in the firm.

Results from the meeting, which lasted just seven minutes, in Dublin’s Davenport Hotel, showed that shareholders crucially approved management’s additional share buy-back plan, but voted against the plans to buy royalty rights from US pharma Theravance; purchase Austrian orphan drug firm AOP; and spin-out its early-stage potential Alzheimer’s treatment, ELND005 to a new company.

While the result was, technically, enough to nullify Royalty Pharma’s hostile approach for the company — pending the outcome of Royalty’s High Court hearing, aimed at changing the rules of the vote, which begins tomorrow — it didn’t stop the US intellectual property firm from talking.

“By rejecting what we believe were hastily-arranged, value-destructive transactions, Elan shareholders are sending you a clear message rejecting your ‘strategic plan’ for Elan. Your shareholders want you to maximise shareholder value and they want you to do it now,” Royalty’s chairman, Rory Riggs said in an open letter to the Elan board yesterday.

The letter, which claims Royalty remains the best option for Elan shareholders, also casts doubt over the Dublin-headquartered firm’s chances of being acquired by another party.

Early last week, Elan said that it had received several unsolicited corporate enquiries and then, on Friday, effectively put itself on the market by opening a formal sale process.

In its letter, Royalty said that, due to its interest, Elan has, effectively, been up for sale for nearly four months.

“If there were other bona fide buyers who were interested in acquiring Elan,” it added, “one would expect them to have emerged publicly in that time. If none have emerged in that time, it is most likely because no other bona fide buyer is interested, at least not at a price higher than Royalty Pharma is offering.”

Royalty has been circling Elan since February, recently upping its bid to $13 per share, plus an extra $2.50 per share depending on certain sales targets being met by MS drug, Tysabri in the next four years.

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