Elan Corp’s shares are on the rise again this morning after the Irish drugmaker noted that it has hired Citigroup Global Markets to conduct a review of its strategic alternatives, including a sale.
The Dublin-based group said the move is aimed at looking to secure access to “the necessary financial resources and commercial infrastructure” to push along its “extensive pipeline and product portfolio” The range of alternatives “could include minority investment or strategic alliance, a merger or sale”.
Chairman Kyran McLaughlin said Elan has recently concluded its annual review of the business and “our progress to date has been significant”. However, “given our many scientific, clinical and commercial opportunities and the capabilities of the industry participants that surround us…this is an appropriate time for the board to explore potential alternative paths forward”.
Last week Elan hit the headlines as rumours of a possible takeover bid from Pfizer started to do the rounds. Chief executive Kelly Martin said at the time that no talks had taken place and it is thought that Elan sees a sale of the business as a last resort.
Ian Hunter, an analyst at the Irish broker Goodbody said that Elan also needs to consider the issue of “the overhang created by $1.1 billion of debt due in late 2011” and “the ability of the company in the current financial markets to re-finance the debt, that is causing caution in the stock”. The alternatives include refinancing, sale of assets and/or issue of equity, he said, noting that “none would seem probable in today’s market conditions, but windows could open in the period between now and November 2011”.
Elan concluded by saying that it will complete the review of potential alternatives “as promptly as practicable”. It added that no additional information will be given “until a definitive agreement is entered into or the process is otherwise completed”.
Meantime, Elan clarified that an article that appeared on Bloomberg claiming that clinical trials of the investigational Alzheimer’s drug bapineuzumab may take longer to complete is wrong. The company stated that the protocols for all four Phase III trials of the drug, which is partnered with Wyeth, are designed to last 18 months and this has not changed since the programme was first announced in December 2007.
