Elan has wrapped up its $3.25 billion deal to sell its stake in Tysabri to Biogen Idec and begun to pivot to the next chapter in its storied journey, ready to unleash a burst of new acquisitions after it hopes to bury a buyout offer from an unwelcome suitor.
Over the last two days the biotech announced that it had closed its deal with Biogen Idec ($BIIB), which sewed up all the rights to the multiple sclerosis drug for $3.25 billion in cash. Then it announced an "irrevocable" decision to retire $600 million in debt with the windfall, paying off senior notes that were due in 2019. And a group called the Irish Takeover Panel set a May 10 deadline for Royalty Pharma to either put up or shut up, forcing the firm to either make a formal buyout offer or walk away.
Elan ($ELN) is essentially now little more than a shell company with a fat bank account and a double-digit royalty stream due from Biogen Idec on future sales of Tysabri. The company has already spelled out a plan to buy back a billion dollars in shares to return some of its cash to stockholders, adding 20% of the royalty stream to tempt investors further. And CEO Kelly Martin says the company has been engaged in deal talks, looking to bring in new technologies and drug assets to remake Elan.
|Elan CEO Kelly Martin|
About the only hurdle in its way right now is Royalty Pharma's expressed interest in buying Elan for $6.6 billion. Martin and the board of directors, though, say the offer isn't credible and want to start making deals, which would instantly change the math on what the company is worth. Elan has been criticized by some analysts for hitting the deal table at a time most assets of any value are already priced high, leaving its strategy in question and raising questions about its long-term risks. Few endeavors are as inherently risky as new drug development, prompting some shareholders to say they'd rather have the cash than a stake in the new Elan.
Over the years Elan's Martin has also been subjected to harsh criticism for his understanding of drug development and therapeutic assets. But he's managed to unload a tremendous amount of the risk involved, executing a major deal for the Alzheimer's drug bapineuzumab, which failed a crucial late-stage study mounted by Johnson & Johnson ($JNJ).
- here's the release on closing the Tysabri deal
- and the release on the senior debt arrangement
- read the release on the takeover timeline