Pharma business is taking a creative leap into unknown
It's not an overstatement to say the past two years have utterly transformed Elan.
Following the deal to sell its Tysabri stake, it will be left with a hefty cash pile that Kelly Martin says will be invested in a "broad balance of assets".
But shareholders might well wonder whether Elan should pull the plug altogether and return the money to them. But Mr Martin is adamant that Elan has a future.
It has endured a year where what had been hoped to be a promising Alzheimer's treatment, in which Elan held a stake, dramatically flopped, sending shares into a nosedive.
And aside from saying Elan can develop a "very unique investment proposition", there's no real detail yet in terms of what the company might target.
Mr Martin said yesterday that in anticipation of the Biogen deal being done, a number of potential transactions and investments have already been put to Elan.
"We are enthusiastic about the market opportunities around the globe and remain flexible and creative about the manner in which we would participate in those opportunities," said Mr Martin.
"With the $3.25bn (€2.4bn) cash payment likely to be devoid of tax obligations, Elan has swapped hope for certainty in ceding control of the asset to Biogen," said a Deutsche Bank analyst yesterday.
But with sales of Tysabri projected to reach between $2.5bn and $3bn by 2016, Elan has secured an attractive revenue base as it seeks out investment targets for its $3.25bn windfall.
The prospects of reinventing the firm have also prompted Mr Martin – a former Merrill Lynch executive – to remain with Elan despite signalling a couple of years ago that he intended to step down. He said yesterday that he will stay for the medium-term.
In some ways, Elan is taking a leap of faith that it can invest the cash pile in such a way that it's ultimately worth more to shareholders. For shareholders, it looks like the beginning of another long journey whose destination is unknown.
"Elan has no track record of running a fully integrated specialty pharma company, so a lot of uncertainty remains," said Guillaume van Renterghem, an analyst at UBS.