Elan CEO Kelly Martin played head cheerleader for yesterday's $3.25 billion deal with Biogen Idec ($BIIB) for its 50% stake in Tysabri, but he couldn't talk up the stock price. Now that he's completed a blockbuster deal to end the partnership, Elan is left with a wad of money to pursue Martin's plan to acquire both approved and experimental drugs. But the company's share price ($ELN) floated south as analysts remained skeptical that the money would be spent wisely or well.
"In the end, the question is where the cash will be spent," Helvea analyst Olav Zilian told Bloomberg. And there's considerable uncertainty over what Martin will pull out of his sleeves, especially as he claims to be well down the road to new deals.
Bloomberg also reported that UBS analyst Van Renterghem compared Elan now to a private equity group, wondering why investors would be enthusiastic about the idea of Martin investing their money rather than doing that themselves. And there was considerable skepticism that Elan was timing the move properly, as a number of outfits--including AstraZeneca ($AZN)--have been signaling their interest in buying assets in the near term.
A lineup of Big Pharma companies is looking for bolt-on deals that would slip easily into their portfolio of therapeutics. And late-stage assets are especially attractive, leaving some to wonder where Martin would be able to find a bargain in today's heated M&A environment. Some analysts would clearly have preferred to see Elan--stripped down to little more than a bank account now--just hand out its cash and call it a day.
But that's clearly not on Martin's list, which appears to be quite long right now.
"You can do a lot of things with $3 billion. You can buy companies, molecules, you can partner, you can share risk. The world is our oyster," Martin told the Financial Express. "We are not necessarily restricting ourselves to one therapeutic area or one type of clinical asset. We will not be restricted to our past, which was by and large neurological."