Elan considers EDT separation

Elan is exploring the possibility of separating its drug technologies unit and creating two publicly listed companies, the company said today.

The biotech firm is beginning an assessment that will look at market conditions, the impact on the business and the timing of such a split, and expects to make a decision in the coming months.

Depending on the assessment, the business would be split into two companies, Elan BioNeurology and Elan Drug Technologies (EDT), which could remain in Ireland. EDT focuses on drug delivery.

"It is also contemplated that BioNeurology and EDT would continue to be based in Ireland. Elan currently anticipates that BioNeurology would continue to be listed on the NYSE and the Irish Stock Exchange, while EDT would be listed on the Irish Stock Exchange and the London Stock Exchange," a spokeswoman for the company said.

Traders said the split would see a renewed focus on Elans operations outside of multiple sclerosis medicine Tysabri, currently the main driver of shareholder value in the group.

"On an operating basis, both EDT and BioNeurology are now profitable. Each represents vastly different investment propositions, and each generates distinct and on-going capital requirements for utilisation against a broad array of potential opportunities," the company said in a statement.

The separation of the drugs technologies unit has been rumoured for some time, with plans for a previous sale delayed in 2008 due to market turmoil and the credit crisis. Elan has since sold an 18.4 per cent stake to Johnson and Johnson.

Elan also said it was seeking a new chairman, after Kyran McLaughlin said he has decided to retire.