Thursday 14 November 2019

Elan to hold on to 18% stake in drug firm Neotope following US float

Nick Webb

Kelly Martin's Elan is likely to retain 18 per cent of experimental drug firm Neotope, which it is poised to float in the US before Christmas.

Although Elan is committed to ploughing around €110m into the new firm to fund early stage development of drugs, analysts suggest that the new firm is likely to be valued at close to €50m when listed.

"It'll be hard to put a punchy valuation on something like this," according to one market source. Elan is dotting "i's" and crossing "t's" with the US Securities and Exchange Commission ahead of a shareholders' meeting to approve the Neotope deal. This is likely to take place in December.

A decision on whether to seek a secondary listing in Dublin or London is likely to be taken early in the New Year.

The plan for Neotope is that it produces three early stage products for possible trialling by 2015. It's a high-risk play.

The Neotope spin-off is the latest in a series of deals where Elan has divested non-core assets -- most recently offloading its drug delivery unit into Alkermes. This is seen by some as a polishing up of the company before a potential sale.

"Some investors have said that they are cleaning the decks to make it easier to do a transaction," according to one broker.

Earlier this year, Martin indicated that he would stay on at Elan until certain drug trials were completed. Shares in the firm sank in August following poor results from trials for Alzheimer's treatment, Bapineuzumab. Now he has indicated he will stay on until the firm becomes more profitable.

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