Flotation at Elan on cards as strategic review planned
Biotechnology group Elan is set to come under pressure from investors on Thursday to outline plans for its profitable drug development and manufacturing unit, which it is believed to be preparing for a sale or flotation.
Elan, which recently reclaimed the top spot as Ireland's largest publicly-quoted group, has reportedly retained Wall Street banks Goldman Sachs and Lehman Brothers to carry out a strategic review of Elan Drug Technology (EDT).
This is seen as paving the way for an initial public offering (IPO) in Dublin and London or trade sale of the business, which has been valued at up to $1.5bn (€946m).
"The company continues to regularly review its portfolio of businesses with a view of maximising shareholder value, while at the same time ensuring the best interests of employees," Elan said yesterday. The group, which is scheduled to release second-quarter figures on Thursday, declined to comment further.
Goodbody Stockbrokers values EDT at between $1.1bn and $1.4bn, but said: "It remains to be seen what value the company can actually achieve in the current markets."
Profitability
Analysts believe Elan will return to profitability next year with growing sales of Tysabri, its multiple sclerosis treatment co-developed with Biogen Idec. They see Tysabri achieving "blockbuster" status within the coming years as it reaches annual sales in excess of $1bn.
EDT had an operating profit of $76.3m last year on sales of $286.2m. The total group made an operating loss of $539.1m on revenues of $516.4m. EDT has a number of proprietary technologies which enhance the performance of dozens of drugs.
Abbott Laboratories' anti-cholesterol drug TriCor and Novartis' attention deficit hyperactivity disorder treatment Focalin XR are among those that use EDT technologies.
"EDT enjoys royalties from such drugs and also manufactures a number. Even in the current economic climate there is an appetite for such deals with potential bidders including (private equity houses) Apax, Blackstone and Warburg Pincus," said Goodbody.
It had been expected that Elan would wait until the publication next week of the full results of Phase II data on its potential Alzheimer's disease treatment, Bapineuzumab. Preliminary data, unveiled last month, bolstered investors' hopes it may offer a possible breakthrough in treating the degenerative brain disorder.
However, the 'Financial Times' reported over the weekend that Elan's advisers will send out an information memorandum to prospective bidders for EDT within days and ask interested parties to submit initial bids by the middle of next month.
- Joe Brennan
