So Biogen Idec ($BIIB) will not buy Elan after all. Instead it will buy full control of Elan's only asset, multiple sclerosis drug Tysabri, leaving Elan ($ELN) as a shell, flush with cash and in search of a purpose.
The cost to get full control of Tysabri is $3.25 billion cash, Bloomberg says. The two had been splitting profits down the middle for the drug, which in 2012 brought in $1.6 billion. When Elan's only other prospect, long-shot Alzheimer's drug bapineuzumab, got iced in August after failing in two trials, the market expected Elan would eventually land in the arms of Biogen. Its partner in Tysabri already owned nearly 20% of the Irish company.
Now Elan CEO Kelly Martin says it will go out and buy some things. There's no talk, at least from Martin, of Elan just giving that money to shareholders and fading away. Instead he tells Bloomberg that he will be on the hunt for a combo of experimental and established drugs to acquire. "This move gives us a chance to reinvest a fair amount of capital across a whole host of assets and helps us redefine and reposition the whole company," he said.
But Guillaume van Renterghem, an analyst at UBS in London, points out to Bloomberg that Martin and Elan really have no experience as a company with more than one product to sell. "Investors would probably appreciate getting their cash back instead of seeing the company diversify through the acquisition of assets," he said.
- read the Bloomberg story