Analysis: Biogen's $3.25B Tysabri pact leaves Elan hunting for deals
Biogen Idec's ($BIIB) newly announced deal to acquire Elan's 50% stake in Tysabri for $3.25 billion and a royalty stream ends an extended period of speculation about the Irish company's last big asset. And it will launch a fresh round of discussion about what Elan plans to do with the cash.
Elan's fate has been in limbo ever since the spectacular late-stage failure of the Alzheimer's drug bapineuzumab. Following that announcement from Johnson & Johnson ($JNJ) and Pfizer ($PFE) several months ago, Elan decided to spin out its early-stage research work, which wasn't believed to be worth much, into a new company called Prothena. After that, analysts buzzed endlessly about the relationship between Biogen Idec and Elan, wondering if the U.S. biotech would end up acquiring the company to gain complete control of the valuable Tysabri franchise as it prepared to launch BG-12 for multiple sclerosis following an expected near-term approval.
That question has now been answered, with Biogen walking away with the asset it wanted without acquiring a company that has created little of value outside of Tysabri. And Elan CEO Kelly Martin, who has been savaged by analysts over the years, tells Bloomberg that the company plans to buy new assets ranging from experimental drugs to commercialized products. That would essentially require Elan to create a new business with the billions on hand.
"This move gives us a chance to reinvest a fair amount of capital across a whole host of assets and helps us redefine and reposition the whole company," Martin told Bloomberg.
"Upon close, this highly unique platform provides us with the financial resources to create an enterprise that will diversify its assets, generate future income, maintain specific science and clinical translational capabilities, and leverage the financial and business structure from being a 40 year Irish plc," Martin said in a statement.
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