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Elan Rises After Saying to Spin Off Discovery Unit: Dublin Mover

Aug. 13 (Bloomberg) -- Elan Corp., whose experimental treatment for Alzheimer’s disease failed in late-stage clinical tests, rose in Dublin trading after saying it plans to spin off its drug discovery unit and won’t discourage takeover offers.

Elan shares rose 4.9 percent to 9.5 euros, the highest level for the stock since July 31. Elan will move all of its drug discovery activity to Neotope Biosciences Plc, in which it will hold a stake of as much as 18 percent, Chief Executive Officer Kelly Martin said today in a media conference call. No poison pills or other deterrents will be used to ward off companies interested in a takeover of Dublin-based Elan, Martin said.

“The separation of the two business units is an effort by management to improve the risk-return profile of the company,” Aiden O’Donnell, an analyst at Dublin-based stockbroker Davy, said in a note. “The business is now entering another phase of its life cycle, becoming free cash generative, and the separation of the research operation is a logical step in de-risking the business.”

Elan’s partners Johnson & Johnson and Pfizer Inc. last week said they were ending plans to develop the drug called bapineuzumab for Alzheimer’s disease. After spending a decade developing the medicine, Elan will now shift away from early research and instead market products that are either in advanced stages of clinical tests or already approved, Martin said.

To contact the reporter on this story: Makiko Kitamura in London at mkitamura1@bloomberg.net

To contact the editor responsible for this story: Kristen Hallam at khallam@bloomberg.net

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