Elan wants to jettison discovery unit

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Elan said Monday it wants to spin off its discovery-centric unit, Neotope Biosciences, and to go forward as a growth-focused company, Elan Corp. The announcement came a week after its experimental Alzheimer's agent bapineuzumab failed to hit its Phase III targets.

The Elan-only entity would focus on leveraging Tysabri, the company's sole marketed product, and a Phase II small-molecule neuropsychiatry drug. It would also include bapineuzumab, which is undergoing Phase II study that has analysts speculating it may target a different Alzheimer's population. Executives said in a statement that the proposal had been in the works before the failed Phase III bapinuzumab results.

The split of the 400-employee company would also divide liabilities: Elan would be “immediately profitable,” according to a company statement that also says the company would consist of about 90 to 100 people headed by CEO Kelly Martin and Chair Robert Ingram.

Jefferies analyst Corey Davis wrote in a research note Monday that the move would help Elan shake off a “chunk of operating expenses,” which could make it an appealing takeover target for its Tysabri marketing partner, Biogen Idec.

Free-standing Neotope Biosciences would have offices split between Dublin and San Francisco, and would be chaired by Lars Ekman, with Dale Schenk as CEO. The company estimates it would employ around 80 people. If the split is approved, Elan plans to seed Neotope with about $120 to $130 million. This could leave approximately 220 people out of work.

Shareholders have to approve the proposal.

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