Bids for embattled Elan arm pitch value of unit at $1.4bn
Wednesday August 13 2008
Embattled Irish drug maker Elan, whose shares have slumped almost 70pc over the past few weeks, has received initial bids for its drug delivery business which could value the arm at as much as $1.4bn (€940m).
The pharmaceutical firm, which saw its shares plummet recently on the back of two new cases of a potentially deadly brain disease linked with its Tysabri multiple sclerosis treatment and poorly received trial data from a new Alzheimer's drug under development, has previously said it wants to spin off the drug delivery unit either through a trade sale or possible flotation.
Elan chief executive Kelly Martin said last month the company's drug technology unit had "very good growth prospects", and that the board would decide how to best position the business. He said any decision would be made "thoughtfully" and in a "disciplined" manner.
It is believed Elan engaged Goldman Sachs and Lehman Brothers to assess options for the technology arm, which has developed drug delivery methods now licensed to a number of pharmaceutical firms, such as Merck and Abbott Laboratories.
Shares in Elan rose only marginally yesterday to close at €7.47 in Dublin, having traded as high as €23.60 last month.
A list of interested buyers for the drug technology unit has been drawn up and it is believed it will be reduced to a shortlist as early as next Tuesday.
Prospective buyers of the unit include the giant private equity firm Texas Pacific Group and Bain Capital.
It is believed that Elan is keen to push through a sale as quickly as possible.
Slumped
Shares in the company slumped as much as 50pc in less than one day earlier this month as two new cases of PML (progressive multifocal leukoencephalopathy) were discovered in European patients using the Tysabri drug, which was co-developed with US pharma firm Biogen-Idec. Previous cases of the disease had seen trials for the drug halted.
Elan is also co-developing an Alzheimer's treatment with drug giant Wyeth. Expected to be a ground-breaking medicine, Elan's shares plummeted about 30pc last month when highly anticipated trial data released at a conference in the US failed to excite investors.
Analysts have said the treatment, if successfully developed, could generate net annual sales of between $7bn (€4.7bn) and $8bn (€5.4bn) by 2015. (Additional reporting, Reuters)
- John Mulligan
