independent

Sunday 20 April 2014

Block on J&J bid for €7bn Elan may be lifted

Results due on potential 'wonder drug'

Elan, which may be on the cusp of the biggest drug discovery ever unveiled by an Irish company, may be taken over by its partner Johnson & Johnson, if crucial trials work.

Johnson & Johnson already owns 18.4 per cent of €6.9bn-valued Elan, following a complex deal which sees the US drug giant fund much of the research costs of its potential Alzheimer's wonder drug.

Coming weeks will see key milestones for Elan and its partners as they await the results of trials before seeking to have the drug cleared by regulators.

Chairman Bob Ingram has hailed the upcoming results as "potentially of transformational significance for Elan".

If the drug is found to work and can be commercially produced, it has the potential to become a blockbuster drug with sales of up to $10bn per year, which would be a gamechanger for Elan, which was set up to develop nicotine patches in Athlone by entrepreneur Don Panoz in 1969. Elan was the first Irish company to list on Nasdaq, when it floated in 1982.

Last week, RBC analyst Michael Yee said top-line findings of two US studies may be released in the second week of August. Another major study into the drug could be completed in about three weeks time. Finally, Elan's research partner Johnson & Johnson and Pfizer are said to be preparing information for the European Federation of Neurological Societies meeting on September 8.

"Our interest in bapineuzumab [the drug] is financial and because of this we are unable to comment on timelines and prospects," according to a spokeswoman.

Johnson & Johnson has been widely linked with a bid for Elan since the start of the year, with Elan's share price ticking up noticeably. Shares have risen more than 40 per cent over the past year.

Under a standstill agreement written into the 2009 deal between Johnson & Johnson and Elan, the US pharma behemoth is not permitted to make a buyout approach until 2014.

However, it is understood that a majority Elan shareholder vote would be able to overrule this agreement.

Elan has a 25 per cent stake in the Alzheimer's programme. The Irish company developed the secret sauce part of bapineuzumab with Wyeth, before Pfizer took over the US company.

Johnson & Johnson and Pfizer are now fronting the research programme.

Elan boss Kelly Martin, who was due to leave the company, at the start of the year, agreed to stay on until after the seminal drug trial results.

The hype surrounding Elan and the potential "wonder drug" may be familiar to shareholders, who have seen the company's share price soar at various times over the past decade on the expectation of a major medical breakthrough. Those investors have nursed heavy losses and must be desperately hoping that, this time, Elan is on to a real winner.

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