* Elan readying mix of commercial, experimental drug deals
* Tysabri sales jump by 28 pct in U.S., near-flat elsewhere
* Investors await Royalty Pharma response to rejected bid
* Elan posts $72.8 million Q1 net loss from continuing ops
By Padraic Halpin
DUBLIN, April 24 Irish drugmaker Elan Corp
said it is teeing up a number of deals under a
plan to reshape the company through acquisitions and stave off a
bid from investment firm Royalty Pharma.
Elan, involved in a convoluted takeover saga with Royalty
for the past two months, had on Monday rejected a reduced $11.25
per share bid from Royalty, saying it grossly undervalued its
The Dublin-based company also said on Wednesday that sales
of Tysabri, the multiple sclerosis drug whose royalty stream
Royalty wants to get its hands on through its bid, rose by 14
percent year-on-year to $456 million in the first quarter.
While shareholders wait to see if Royalty values lucrative
revenue tied to the blockbuster drug enough to come back with a
higher bid, Elan indicated how it plans to spend the $2 billion
it has at its disposal.
Chief Executive Kelly Martin reiterated the company would
seek to diversify away from its neurological focus and that some
of its initial deals would be immediately accretive to earnings,
with others likely to be investments in experimental treatments.
"When the market hears from us about the first phase of
re-allocation, it should look for a collection of different
things, not just one big transaction," Martin told an analyst
"There clearly are some interesting commercial pieces of the
equation that we would like to add, one of the things we want to
do is make sure the P&L (profit and loss) continues to be robust
and grows," Martin added.
"That would imply directly that commercial activities would
be part of the equation, but we want to maintain a balance,
there are some interesting late-stage clinical assets that from
a risk/reward point of view would be interesting investments."
Martin said he would not put any specific timeline on when
phase one of Elan's acquisition plan would be unveiled, but said
Royalty's bid would not preclude it from doing so as soon as the
package is ready.
Elan's spending plans are a result of it selling its 50
percent interest in Tysabri to U.S. partner Biogen Idec
in February for $3.25 billion plus royalty rights.
Under the deal, Elan's royalty payments will be 12 percent
of sales in the first year, 18 percent after that and 25 percent
when annual sales rise above $2 billion. A fifth of the royalty
stream will be paid out to shareholders under a dividend plan
outlined shortly after the Royalty approach.
Elan also returned $1 billion to shareholders last week in a
share buyback that resulted in U.S. healthcare firm Johnson &
Johnson cutting its stake in the company to 4.9 percent
from 18 percent.
Sales of Tysabri rose to $1.6 billion last year and Biogen
has long aimed to increase patient numbers over time to 100,000
from 72,700 at the end of last year. Analysts at Berenberg Bank
see sales hitting $2 billion in the first half of next year.
It said on Wednesday sales of the drug, which competes with
oral drugs such as Novartis AG's Gilenya and Biogen's
new Tecfidera pill, rose 28 percent in the United States but by
just 0.3 percent elsewhere, after a further $13.9 million of
revenue was deferred in Italy.
Elan also posted a $72.8 million first-quarter net loss from
continuing operations, which did not include any revenue
associated with Tysabri.
Its shares were little moved, trading up 0.5 percent at
$12.05 by 1430 GMT in New York.