Elan has announced plans to spin off its discovery science and neotope biosciences divisions to create a second company.
Neotope Biosciences is to operate as a drug discovery platform and would be given "resources and time to advance programs for chronic degenerative diseases", Elan said.
The move is subject to conditions, including approval by shareholders and holders of Elan’s 2016 notes, which the company said it would be seeking as soon as is practical. It is expected to be completed by the end of this year.
The decision comes hard on the heels of the failure of an experimental Alzheimer's drug being developed with Pfizer and Johnson & Johnson, although Elan chief executive Kelly Martin said it had been planned for more than a year.
The move may fuel speculation that Elan, shorn of its loss-making research arm, will be a more attractive takeover target for US biotech company Biogen Idec, with which it markets the multiple sclerosis drug Tysabri.
Mr Martin declined to comment on Biogen's potential bid interest but told reporters there were no obstructions to any company launching a takeover offer.
Elan said in 2013, after a successful spin-off transaction, it will have an estimated EBITDA in excess of $400million and estimated net income in excess of $250 million. It will be targeting $1.00 earnings per share for shareholders by 2015. The move would see Elan become immediately profitable.
“This is a bold and logical strategic step as it provides shareholders with the ability to delineate risk, timelines and business characteristics to their own specific investment objectives,” Elan chairman Robert A Ingram and chief executive Kelly Martin said in a joint statement.
“By establishing Neotope Biosciences and Elan as distinct businesses – each with its own specific business characteristics and dynamics - we provide investors with important clarity, transparency and choice as it relates to their investment decisions.”
Elan said it would commit some $120-130 million start-up capital to Neotope, while retaining a 14 to 18 per cent minority stake in the new company.
Neotope Biosciences is to be led by chairman Dr Lars Ekman and chief executive Dr Dale Schenk. The company will be incorporated in Ireland with operations in San Francisco, California.
