Elan Corporation, plc
) recently provided an update after it announced the
restructuring of the Tysabri collaboration with
Notably, Biogen gained full strategic, commercial and
operational control over Tysabri. As per the agreement, Elan will
be receiving an upfront payment of $3.25 billion from Biogen. For
the first year, Biogen will make royalty payment of 12% on the
worldwide net sales of Tysabri (for all indications). After the
first year, Elan will receive a royalty of 18% on up to $2
billion of global net sales of Tysabri and 25% thereafter on over
$2 billion of global net sales of Tysabri.
The current collaboration agreement (profit and loss equally
shared) between the companies will be terminated. The transaction
is expected to end in the first half of this year.
Elan mentioned in its press release that it expects to invest
a portion of the $3.25 billion into multiple business assets.
These assets are expected to diversify the company's portfolio
from a product, science/clinical, therapeutic, and geographic
point of view. Elan expects to announce a number of strategic
transactions this year upon or after the close of the Tysabri
Elan also has plans to refinance its outstanding debt. The
company is expected to announce details of its refinancing
following the closure of Tysabri restructuring.
Moreover, Elan announced that it will institute a share
repurchase program by utilizing $1 billion of the upfront
proceeds post the restructuring of Tysabri. As a result of the
repurchase program a significant portion of the unlocked value of
Tysabri will be returned to Elan's shareholders.
We are impressed with the company's initiatives post its
announcement of Tysabri restructuring. But we still believe that
Tysabri is an important product at Elan. We expect Elan to
actively pursue more in-licensing deals or acquisitions.
Elan currently carries a Zacks Rank #2 (Buy). Biotech
companies such as
), which carries a Zacks #2 Rank (Buy), and
United Therapeutics Corporation
), which carries a Zacks Rank #1 (Strong Buy), too are well
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