) recently provided an update on its strategic plans for the
future. The company plans several acquisitions and has other
strategic initiatives lined up for further advancement.
Elan is set to acquire privately held AOP Orphan
Pharmaceuticals ("AOP"), for an upfront payment of €263.5 million
(cash of €175.7 million and Elan ordinary shares of €87.8
million) plus regulatory milestone payments of up to €270
AOP focuses on developing innovative drugs for orphan
indications in areas like hematology & oncology, cardiology
& pulmonology, neurology, and metabolic disorders. AOP
currently has four late-stage candidates in its portfolio. In
2012, AOP recorded revenues of around €59 million (approximately
Additionally, Elan intends to buy 48% shares of Newbridge
Pharmaceuticals, another privately held company, for $40 million.
Elan also has the option to buy the remaining stake in Newbridge
Pharma for $244 million by 2015.
Newbridge Pharma focuses on in-licensing deals, acquisitions,
registering and commercializing approved products
(pharmaceuticals and biologics) in areas like oncology,
immunology, metabolic disorders, gastrointestinal and central
Apart from acquisitions, Elan also has plans to divest its
pipeline candidate, ELND005, to an independent company, Speranza
Therapeutics. Speranza will be responsible for the future
development of the candidate. ELND005 is currently under
development for the treatment of agitation/aggression in
Alzheimer's disease, and Downs Syndrome.
Elan will be making an upfront payment of $70 million to
Speranza for an 18% minority equity position. Speranza is also
expected to receive up to $8 million in future. Additionally
Speranza will receive royalties in major markets along with
additional milestones, and will retain commercial rights in
The ELND005 divestiture will help the company cut down
operating expenses related to the development of the candidate.
The company expects to cut its operating expenses guidance of
$170−$190 million by around $35 million to $45 million.
We note that Elan recently inked a deal with
) to purchase a participation interest in potential future
royalty payments for a one-time cash payment of $1.0 billion.
Elan is expected to receive a 21% participation interest in
potential future royalty payments that Theravance would likely to
) from four respiratory programs.
Moreover, the company announced a debt offering of $800
million to optimize its capital structure and maintain its
strategic flexibility and significant cash balance. Elan also
announced a $200 million share repurchase program.
The transactions will go through upon approval from Elan's
shareholders after the company's Extraordinary General Meeting in
June this year.
Meanwhile, Royalty Pharma recently raised its offer for Elan
to $12.50 per share in cash from the previous offer of $11.25 per
share. Royalty Pharma's raised offer however does not include the
$1.00 per share net cash right that was there in its previous
offer. Elan's Board will assess Royalty Pharma's offer and will
advise its shareholders accordingly.
We believe that the ELND005 divestiture is encouraging. The
company will be able to reduce its operating expenses to some
extent. However, we have very low visibility on the products that
will be added to Elan's portfolio as a result of the
Elan presently carries a Zacks Rank #2 (Buy).
Jazz Pharmaceuticals Public Limited
) currently looks better positioned with a Zacks Rank #1 (Strong
ELAN CP PLC ADR (ELN): Free Stock Analysis
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