Elan Corp PLC (ELN)

[rocky822]

Irish Agenda: Takeover rumours centre around Elan's other blockbuster
Joe Brennan

ELAN’S share price gained more than 12% in New York last week to $14.94 (€11.72) amid speculation that Wyeth, an American pharmaceutical giant, was considering a bid for the $6.4 billion company.
Market participants say a takeover would be a logical step, given their partnership in a multibillion dollar Alzheimer’s programme.

“But why now? They could have snapped up Elan a year ago when its stock was worth half what it is now,” said a Dublin-based fund manager. “Is it that the Alzheimer’s pipeline has thrown up amazing results in trials?”

Indeed.

Wyeth declined to comment.

The partners’ first hopeful treatment for the degenerative disease, AAB-001, is expected to move into Phase III clinical trials later this year, after they unveil the results of the second phase. Phase III is the final stage before pharma companies apply to the regulatory authorities for approval.

A second drug, ACC-001, is to move into Phase II later this year, about the same time that a third treatment is expected to enter clinical trials.

With the hype around Tysabri, the multiple-sclerosis treatment, the Alzheimer’s programme has been pushed into the background. Goodbody Stockbrokers forecast earlier this year that if the first drugs get the green light, they could account for half of what it predicts to be a $10 billion Alzheimer’s drug market within the next 10 years. It is currently worth $3 billion.

“It would make perfect sense for Wyeth to take Elan out before the market really starts to price its prospects,” said one analyst.

But others remain sceptical. “Elan’s share price is notoriously volatile. This is not the first time it has been surrounded by takeover rumours and, I suspect, it won’t be the last,” said another dealer.

A third analyst said: “A move by Wyeth at this stage would suggest it was somewhat shortsighted by spending €1.8 billion building a facility at Clondalkin last year when Elan’s factory in Athlone is only running at 40% capacity.”

It is understood that a partnership agreement for Tysabri between Elan and the American group Biogen contains a clause that if either company is taken over, both sides have to put in a sealed bid for the drug.

http://www.timesonline.co.uk/article/0,,2095-2291024,00.html