UPDATE 1-Royalty Pharma plans to tap Elan investors on offer -source
* Royalty has not received response from Elan
* Biggest shareholder is Johnson & Johnson
By Jessica Toonkel
NEW YORK, Feb 26 (Reuters) - New York-based investment firm Royalty Pharma does not want to take "no" for an answer to its $6.6 billion offer for Irish drugmaker Elan Corp.
The company plans to spend the next few weeks calling Elan shareholders about its offer made on Feb. 18, according to a source familiar with the situation.
Royalty Pharma, which buys royalty streams of patented drugs and whose portfolio includes rheumatoid arthritis treatments Humira and Remicade, is turning to Elan's investors because it has received no formal response from the company about its offer, said the source, who wished to remain anonymous because of not being allowed to speak to the media.
Elan's biggest shareholder is Johnson & Johnson with an 18 percent stake.
An Elan spokesman declined to comment, as did Johnson & Johnson. A Royalty Pharma spokesman did not return a request for comment.
Royalty Pharma's offer, worth $11 per Elan share, came just days after Elan announced it had sold its 50 percent interest in multiple sclerosis drug Tysabri for $3.25 billion plus future royalty payments to U.S. partner Biogen Idec.
As a result of the Tysabri sale, Elan announced on Friday that it would return $1 billion to shareholders and make acquisitions with the rest of the $3.25 billion raised from the deal. Elan did not disclose the Royalty Pharma offer, which was not a formal bid.
Elan, in a statement on Monday, said Royalty Pharma's bid was an "indicative, conditional, proposal which may or may not lead to an offer being made for the entire issued share capital of the Company".
Elan also called the Royalty Pharma bid "highly opportunistic", given that shareholders had not had the opportunity to assess the full benefits of the Tysabri sale.
However, Royalty Pharma does not think Elan's management had the experience to make acquisitions, the firm said in its statement announcing its proposed offer on Monday.
Still, Royalty Pharma may have a tough time buying Elan given its $11-a-share offer, wrote Corey Davis, an equity analyst for Jefferies, in a note on Tuesday.
Royalty Pharma will have to get closer to $20 a share if it wants to buy the company, wrote Davis, who has a "buy" on Elan.
Elan's stock on Tuesday closed slightly above the offer price at $11.03, a 7 percent increase from Friday's close on the New York Stock Exchange.
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