Analysts see sale of Elan to Biogen Idec as likely

No sooner had the world learned of disappointing clinical results on Elan Corp.'s ($ELN) Alzheimer's therapy, bapineuzumab, than pharma prognosticators started handicapping chances that it would be bought out by Biogen Idec ($BIIB).

Elan currently has only one hit drug, the multiple sclerosis treatment Tysabri, and it only co-owns that. Biogen is its partner on the product and analysts think it would love to have it all. To Jefferies Group and Royal Bank of Canada, that suggests a buyout they say could run to $7.1 billion, Bloomberg reports. Jefferies speculates that Tysabri's sales will double to $3 billion in the next 5 years and that Biogen could milk it for even more if it has the drug all to itself.

Then there is this: Elan CEO Kelly Martin agreed to hang around until the clinical data was out instead of leaving May 1, as had been expected under his longstanding exit plan. The data is out. It is disappointing. If he leaves, Elan won't have a CEO or a promising future.

The two companies are not talking, but that doesn't stop analysts from suggesting a deal.

Pfizer ($PFE) this week reported that bapineuzumab did not help alleviate dementia in the first of four late-stage trials for the Alzheimer's therapy, which Elan is developing with Pfizer and Johnson & Johnson ($JNJ).

But RBC analyst Michael Yee thinks the next three bapineuzumab studies will show similarly disappointing results. To him and others, that sets the stage for the inevitable: sell the company at about $15 a share, or see the stock slide to $10.

- here's the Bloomberg story

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