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Royalty Pharma raises Elan bid as deals keep coming

Values Elan at about $6.5bn

Royalty Pharma has raised its offer for Elan and dropped due diligence conditions in a bid to stop investors backing the Irish company's investment plans.

The latest bid from privately-held Royalty Pharma, which specialises in buying up intellectual property assets in the drug sector and generating revenues from royalty interests, is for $12.50 per share, valuing Elan at about $6.5bn.

The bid comes with a warning to Elan's shareholders that Royalty Pharma will withdraw its offer if they give the go-ahead to various transactions that make use of the $3.25bn windfall arising from the company's decision to transfer rights to its multiple sclerosis therapy Tysabri (natalizumab) to Biogen Idec.

Last week, Elan announced buy-in to a royalty stream from respiratory drugs developed by Theravance and GlaxoSmithKline for $1bn, and followed that up with a €534m takeover offer for Austrian company AOP Orphan, as well as stakes in drug developers Newbridge Pharmaceuticals and Speranza Therapeutics worth $284m and $78m, respectively.

Other defensive measures adopted by Elan included a debt issuance of $800m and a $200m share buyback programme.

Royalty Pharma says the Theravance deal "was pursued in haste and without critical confidential information, which could significantly impair the value of the asset". The company added that it "expects the same is true of the other transactions".

Announcing the latest investments, Elan's chief executive Kelly Martin said the company's transactions were "designed to create a balance of risk …with the benefit of diversification (therapeutics, geographies, science and operational constructs) to produce long-term growth in income and value".

AOP Orphan had revenues of €59m last year and has four late-stage pipeline programmes, while Newbridge is a Dubai company specialising in in-licensing and commercialising approved pharmaceuticals and biologics products in the Africa, Middle East and Turkey (AfMET) regions.

Finally, Speranza is a new company set up in Ireland to handle the development of ELND005 (scyllo-inositol), a clinical-stage drug candidate with potential in bipolar disease, agitation and aggression in Alzheimer's and Down syndrome.

Elan's shareholders are scheduled to vote on the transactions at a meeting on June 17. The company's board issued a statement after the Royalty Pharma announcement indicating it would evaluate the new offer and "advise shareholders accordingly".

21st May 2013

From: Sales

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