Elan shares up, hires consultants for fundraising

Shares in Elan rose by almost 12 per cent in early trade in Dublin on news that the company has hired Citigroup Global Markets to conduct a review of the company’s strategic alternatives in a bid to raise capital.

At 8.20am the stock was trading at €6.65, a gain of 11.7 per cent.

Among the options being considered by Ireland’s biggest drugmaker is a minority investment, a strategic alliance, a merger or the company’s least preferred option, a sale.

The maker of the Tysabri multiple sclerosis treatment said it’s committed to completing the review “promptly” and comes in the context of the company having a strong pipeline of products but also having significant debts of $1.15 billion to service by 2011. It has not set a deadline for the completion of the process.

The company said that contrary to media reports it is not in talks with Pfizer or any other company over a possible sale but is in “ongoing talks” with a number of other interested parties.

Speaking on RTÉ's Morning IrelandElan's head of corporate relations Mary Stutts said the company was looking to ensure it has the resources to develop a promising pipeline of new drugs.

She said a sale would be the last alternative and that Elan would prefer a minority investment or strategic alliance.

Elan suffered a 72 per cent drop in share value last year amid concerns about the safety of Tysabri.

Bloxham stockbrokers said the main obstacle to an outright takeover is that Tysabri and Bapineuzumab are both tied up in 50/50 deals with Biogen and Wyeth respectively.

In a note to investors Davy analyst Jack Gorman said although the strategy appears complimentary to recent initiatives to inject cash into the company “today’s announcement is potentially of much more significance”.

BiogenIdec and Wyeth would appear the most obvious strategic partners and said that the prospect of a third party investing with Elan on its other pipeline projects is possible but could be potentially complicated.

Separately, Elan moved today to clarify recent media reports that claimed the duration of the phase 3 clinical trials for its alzheimer’s drug bapineuzumab had been extended.

The trials were designed to run for 18 months and Elan said the “planned duration of the trials has not changed”.

Additional reporting agencies