Irish drugmaker Elan has announced the spin off of its discovery science and Neotope Biosciences into a separate business entity "to create two independent, highly focused, public companies".

Following the move, Elan will hold three key assets: the multiple sclerosis blockbuster Tysabri and its other potential indications; ELND005, a Phase II/Phase IIb ready small molecule being tested in a range of neuropsychiatry and symptomatic diseases; and the continued interest in Janssen AI, which includes Phase II bapineuzumab.

According to Elan, its company will be an immediately profitable and high growth business, which will retain its headquarters in Dublin, Ireland, housing around 90-100 employees.

Following a successful spin-off, it is expected that Elan's earnings in 2013 will overshoot $400 million with estimated net income of more than $250 million, while earnings per share of $1.00 are targeted by 2015, the firm said.

Neotope Biosciences, which actually set up back in 2010, will now operate as a separate drug discovery business platform, mainly focused on identifying and translating targets into potential therapies for chronic degenerative diseases, such as Parkinson's, and other therapeutic areas.

The company will be incorporated in Ireland but will also have operations in South San Francisco, California, with around 80 employees in total.

Elan said it will inject around $120-$130 million start-up capital into Neotope in exchange for around 14% - 18% equity, noting that the latter could potentially have three new INDs by 2015.

Logical step

Commenting on the move, Elan's chairman Robert Ingram described it as "a bold and logical strategic step" that will give shareholders "the ability to delineate risk, timelines and business characteristics to their own specific investment objectives".

"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," added Elan chief executive Kelly Martin.

The company was also keen to stress that the recent failure of bapineuzumab in Phase III trials in Alzheimer's disease had nothing to do with the decision to split operations, noting that discussions on the plans "took place well in advance" of the release of top-line data from the studies.