-
Creates two independent, unique companies
-
Transaction aligns assets, timelines, and risk/reward
-
Elan to become immediately profitable and a high growth company
-
Targeting $1.00 earnings per share by 2015 with new business
construct
-
Commitment to science by providing initial capital to Neotope
Biosciences plc
-
Completion of transaction expected by year end 2012
DUBLIN--(BUSINESS WIRE)--Aug. 13, 2012--
Elan Corporation, plc (NYSE:ELN) announced today that its Board of
Directors has approved the spin-off of the discovery science and Neotope
Biosciences from the company. Completion of this transaction will create
two independent, highly focused, public companies that will enable
investors to align timelines, risk and returns in order to best achieve
their investment objectives. The two companies will be:
A focused business that will generate growth; immediate and long term
profits; and expanding margins. Additionally, this profitable business
will be able to utilize our advantageous tax structure and create
incremental after-tax earnings to the direct benefit of shareholders.
Initially consisting of three main assets: Tysabri (marketed in
collaboration with Biogen Idec) for Multiple Sclerosis (MS) and other
potential indications; ELND005 a small molecule asset that is Phase
2/Phase 2b ready in a range of neuropsychiatry and symptomatic diseases
that targets non-amyloid pathologies; and lastly, the continued interest
in Janssen AI which with Pfizer manages the on-going AIP portfolio
including Phase 2 Bapineuzumab (subQ); Phase 2 vaccine (ACC-001) and
Phase 1 AAB-003 (mab).
Drug discovery business platform, originally established in 2010,
focused primarily on identifying and translating targets into potential
therapies for chronic degenerative and other related disease areas. This
entity will continue to focus on innovation, differentiated scientific
advancement, unique intellectual property creation and translational
capability to transform science into clinical assets.
Transaction Conditions and Timeline
Completion of the spin-off is subject to conditions, including approval
by our shareholders and by holders of our 2016 Notes, which the Company
will be seeking as soon as is practical. Additional details of the
proposed spin-off, including proportionate shareholding and separate
financial information relating to both Elan and to Neotope Biosciences
will be provided to shareholders. If the transaction is effected, we
expect there to be a separate listing of Neotope Biosciences on a U.S.
exchange, by the end of 2012. Elan will incur a charge upon completion
of the transaction.
Leadership Comments
“This is a bold and logical strategic step as it provides shareholders
with the ability to delineate risk, timelines and business
characteristics to their own specific investment objectives. As we have
done over the past decade and will continue to do in the future, the
strengthening of the balance sheet, capital structure, income statement
and progression of the science for the benefit of patients, has been a
constant goal and objective of the management team and supported by the
board of directors,” said Robert A. Ingram, Chairman of Elan and Kelly
Martin, CEO. Messrs. Ingram and Martin added that, “All of our previous
actions, including most notably the separation of the Elan Drug
Technologies business and its merger with Alkermes plc as well as the
establishment of Janssen AI with Johnson & Johnson in a sharing of the
risk/reward around the AIP asset, have been designed to improve the
risk/return profile of the company, cluster businesses and assets
logically for shareholders.”
Mr. Martin commented further, “By establishing Neotope Biosciences and
Elan as distinct businesses – each with its own specific business
characteristics and dynamics - we provide investors with important
clarity, transparency and choice as it relates to their investment
decisions.”
Mr. Martin added, “For Elan Corporation, plc, the completion of this
transaction is a natural progression and final step to becoming a
company that generates both profits and growth to the benefit of
stakeholders. The dominant focus will be broadening and deepening
patient access to TYSABRI on a global basis and registering ELND005 for
multiple indications in neuropsychiatry and other symptomatic
indications. This move to immediate profitability will enable us to
utilise the benefit of the significant accumulated losses that have been
built up over the years. We intend to explore ways to share this benefit
with our stakeholders through some combination of debt repurchases,
share buy backs, dividends or all three. Further communication on this
topic will be forthcoming in the months ahead and upon completion of the
transaction.”
“With Elan’s commitment to capitalize Neotope’s Bioscience, our highly
talented scientific team who have previously discovered TYSABRI and an
approach to immunotherapy for Alzheimer’s, will have the resources and
time to advance programs for chronic degenerative diseases, such as
synuclein for Parkinson’s disease, along the drug development stages and
provide opportunities for investors to participate in this journey”,
said Dr. Lars Ekman, Chairman designate of Neotope Biosciences. Dr.
Ekman continued, “In the longer term, the team’s heightened focus and
dedication to translating unique scientific insight into clinical
programs will provide benefits to the field of life sciences across a
broad array of diseases for the ultimate benefit of patients. With this
transaction, their successes and insights are expected to provide
enormous benefit to the world.”
Messrs. Ingram and Martin concluded, “Our board and management team have
spent the previous twelve months assessing the optimal alignment of
assets, risk/reward and income statement dynamics to the marketplace and
our shareholders. These discussions took place well in advance of the
recent release of the top line outcomes of the Bapinezumab Phase 3
trials. The transparent alignment of distinctive timelines and unique
business characteristics to enable shareholder investment decisions and
choice was our guiding principle and remained a constant which
ultimately resulted in today’s announcement.”
Highlights of Previous Decade
The previous decade for Elan has been characterized as one of consistent
focus and execution on delivering improvements in all aspects of its
business fundamentals. Highlights of this journey include:
-
Expected 2012 revenues of $1.2 – 1.25 billion; growth of 150% since
2004
-
Operating Expenses have decreased by more than 50% since 2002
-
Adjusted EBITDA of positive $147 million in 2011, versus negative $203
million in 2004
-
Debt and Contractual obligations reduced by 76% since 2002
-
Corporate tax rate of 12.5% with the benefit of accumulated losses and
structures in excess of $4 billion
-
Launched Tysabri (twice) – for MS with potential for additional
indications
-
Reduced AD clinical risk with J&J – maintained programs while
retaining 25% of P&L
-
Successful divestment of EDT, generating $1 billion of non-dilutive
capital for Elan plc
-
Advanced ELN005 through Phase 2 with potential therapeutic symptomatic
applications
-
Advancement of pre-clinical novel targets programs: synuclein, MCAM,
tau, amyloid
Strategic Rationale
Today, Elan Corporation, plc is comprised of two distinct investment
propositions with differing science-business risks and timeframes:
-
Commercial and growth oriented profitable business capable of
generating meaningful after tax earnings for the benefit of
stakeholders over the long term. Time horizons immediate and on-going.
-
Early discovery and translation to humans focused on pathology-biology
based mis-folding protein targets in chronic degenerative diseases.
Science and its predictability remain the major risk factor; time
horizons of 5+ years to the clinic.
The Board of Directors as well as executive management believe
separating into two distinct business will enable appropriate alignment
of funding/capital structures with the mission of each respective
business; where the interests of the shareholders and the management
team will be synchronized with the risk, return and timelines of
activities.
Elan Corporation plc Profile
-
Immediately profitable and high growth company
-
Headquartered in Dublin, Ireland
-
2011 revenues of $1.2 billion; 2011 GAAP Operating Expenses of $403
million
-
Post transaction GAAP Operating Expenses of ~ $300 million
-
2013 post a successful spin-off transaction estimated EBITDA in excess
of $400 million and estimated Net Income in excess of $250 million;
and targeting $1.00 earnings per share for our shareholders by 2015,
with the new business construct
-
Corporate tax of 12.5%; more than $4 billion in accumulated losses and
other structures for after tax EPS incremental returns and stakeholder
benefits
-
ELND005 with Phase 2/Phase 2b in several neurology and neuropsychiatry
symptomatic indications
-
Leadership:
-
Chairman: Robert A. Ingram
-
Chief Executive Officer: Kelly Martin
-
Employees: approximately 90 – 110 people
-
Equity interests in Janssen AI - AIP Programs, Alkermes plc,
Proteostasis Therapeutics, and Neotope Biosciences
Neotope Biosciences plc Profile
-
Drug discovery company focused on translating distinct targets into
therapies for chronic degenerative and other related diseases
-
Incorporated in Ireland with operations in South San Francisco,
California
-
Key targets: synuclein, tau, MCAM, amyloid for application to a wide
variety of diseases
-
Potential for three INDs by 2015
-
Expected cash spend of $50 - $60 million per annum
-
Leadership:
-
Chairman: Dr. Lars Ekman
-
Chief Executive Officer: Dr. Dale Schenk
-
Employees: approximately 80 people
-
Elan Corporation plc to commit $120-$130 million start-up capital and
to retain 14 - 18% minority equity position
Conditions
The transaction is subject to a number of conditions, including approval
by shareholders and the holders of the 2016 Notes.
Advisors
Elan’s financial advisors are Citigroup and Ondra Partners.
Investor/Analyst Conference Call
Elan will host an investor/analyst conference call at 8.30am ET today.
This call will be simultaneously webcast over the internet and will be
available to investors, members of the news media and the general
public. The event can be accessed by visiting Elan’s website at www.elan.com
and clicking on the Investor Relations section, then on the event icon.
Slides will be available on www.elan.com
at the time of the conference call/webcast.
About Elan
Elan is a neuroscience focused biotechnology company committed to making
a difference in the lives of patients and their families by dedicating
itself to bringing innovations in science to fill significant unmet
medical needs that continue to exist around the world. For additional
information about Elan, please visit http://www.elan.com.
Forward Looking Statements
This document contains forward-looking statements about Elan’s
financial condition, results of operations, business prospects and
products in research and development that involve substantial risks and
uncertainties. You can identify these statements by the fact that
they use words such as “anticipate”, “estimate”, “project”, “target”,
“intend”, “plan”, “will”, “believe”, “expect” and other words and terms
of similar meaning in connection with any discussion of future operating
or financial performance or events. Among the factors that could
cause actual results to differ materially from those described or
projected herein are the following: whether or when the proposed
spin-off will be effected, if the spin-off is effected whether Elan
Corporation, plc will be profitable, will grow, will increase margins
and will be able to take advantage of its accumulated tax losses, the
potential of Tysabri, which may be severely constrained by increases in
the incidence of serious adverse events (including death) associated
with Tysabri (in particular, by increases in the incidence rate for
cases of PML), or by competition from existing or new therapies (in
particular, oral therapies), and the potential for the successful
discovery, development and commercialization of additional products;
Elan’s ability to maintain sufficient cash, liquid resources, and
investments and other assets capable of being monetized to meet its
liquidity requirements; the success of our research and development
activities, and research and development activities in which we retain
an interest, including, in particular,; Johnson & Johnson and Pfizer
announced on August 6, 2012 that they were discontinuing development of
bapineuzumab IV in mild to moderate Alzheimer’s disease) and the speed
with which regulatory authorizations and product launches may be
achieved; our dependence on Johnson & Johnson and Pfizer for the success
of AIP; we own approximately six percent of Alkermes plc and our shares
are subject to legal and contractual transfer restrictions; failure to
comply with anti-kickback, bribery and false claims laws in the United
States, Europe and elsewhere; difficulties or delays in manufacturing
and supply of Tysabri; trade buying patterns; the impact of potential
biosimilar competition, whether restrictive covenants in Elan’s debt
obligations will adversely affect Elan; the trend towards managed care
and health care cost containment, including Medicare and Medicaid;
legislation and other developments affecting pharmaceutical pricing and
reimbursement (including, in particular, the dispute in Italy with
respect to Tysabri sales), both domestically and internationally;
failure to comply with Elan’s payment obligations under Medicaid and
other governmental programs; exposure to product liability (including,
in particular, with respect to Tysabri) and other types of lawsuits and
legal defense costs and the risks of adverse decisions or settlements
related to product liability, patent protection, securities class
actions, governmental investigations and other legal proceedings; Elan’s
ability to protect its patents and other intellectual property; claims
and concerns that may arise regarding the safety or efficacy of Elan’s
products or product candidates; interest rate and foreign currency
exchange rate fluctuations and the risk of a partial or total collapse
of the euro; governmental laws and regulations affecting domestic and
foreign operations, including tax obligations; general changes in United
States and International generally accepted accounting principles;
growth in costs and expenses; and the impact of acquisitions,
divestitures, restructurings, product withdrawals and other unusual
items. A further list and description of these risks, uncertainties and
other matters can be found in Elan’s Annual Report on Form 20-F for the
fiscal year ended December 31, 2011, and in its Reports of Foreign
Issuer on Form 6-K filed with the SEC. Elan assumes no obligation to
update any forward-looking statements, whether as a result of new
information, future events or otherwise.
Source: Elan Corporation, plc
Elan Corporation, plc
Investor Relations:
Chris
Burns, 800-252-3526
David Marshall, + 353-1-709-4444
or
Media
Relations:
Emer Reynolds, + 353-1-709-4022
Jonathan Birt,
+44-751-559-7858
Jamie Tully, +1-212-687-8080
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