Hi °C | Lo °C Drugmaker Elan rose more than 15pc yesterday to €5.64 on takeover speculation from Denmark's H Lundbeck.
The stock has risen for the past five days, gaining 43pc, but shares have also been boosted by positive news from one of its research partners, Biogen.
In January, Elan effectively put itself up for sale and appointed Citigroup as an adviser on strategic options, including a possible merger or sale.
A month later, the company said it was considering selling its stake in multiple sclerosis drug Tysabri, its only money maker, or a division of the business to pay down debt.
Rumour
"There is a rumour going around on the market that Lundbeck may be making an €8 bid for Elan this evening," said Manus Cranny, senior market commentator at MF Global in London. "There may be some substance to it as we are seeing corporate bonds ticking slightly higher, which is an indication of some action in the stock."
But other analysts poured cold water on the speculation. One questioned what exactly Lundbeck would buy.
Biogen, Elan's partner in Tysabri, has the right to buy Elan's 50pc stake of the drug in the event of a takeover.
Positive newsflow
He added that given the positive newsflow from Biogen's R&D day earlier this week, the likelihood was that the company would exercise this option.
Elan's drug development unit was valued at about $1bn recently. Niamh Lyons, a spokeswoman for Elan, declined to comment.
Elan will have $200m in cash at the end of this year, about half the amount at the end of 2008, and needs money for the final tests of drug candidates to treat Alzheimer's disease.
Biogen announced this week that doctor confidence surrounding Tysabri was returning. Over 60pc of physicians of those sampled said the benefits of Tysabri outweighed the risks, compared with 45pc after the two PML cases in June 2008.
In addition, 74pc of neurologists said they intended to increase use of the multiple sclerosis treatment.
