Elan looks again at hiving off drug delivery unit EDT
pharmafile | April 22, 2010 | News story | Research and Development, Sales and Marketing | Elan
Irish drugmaker Elan says it is once again considering spinning out its drug delivery division, Elan Drug Technology, after abandoning a similar objective back in 2008.
The plan, which is still in the early stages, would create two separate, publicly-listed companies: Elan BioNeurology focusing on drug development and marketing Elan’s portfolio of medicinal products, and EDT, concentrating on contract product development using an array of formulation and drug optimisation technologies, as well as scale-up and manufacturing services.
In a statement the company said it would make no further comment on the plan until the board had examined the impact of the separation, but in the past company management has said that the EDT unit could benefit from more focus.
“Both the BioNeurology and EDT businesses are profitable at the operating level,” said Elan chief executive Kelly Martin during the firm’s first-quarter results call yesterday.
Strong growth at both divisions seems to have prompted Elan’s management to look again at the structure of the company, and see if it would benefit from separating out EDT, which relies on manufacturing revenues and royalties, rather than product sales.
Around $76 million of Elan’s first-quarter revenues of $310 million came from EDT, up a healthy 28% over the same period of 2009. Elan BioNeurology saw revenues advance 26% to $234m on another strong performance by multiple sclerosis treatment Tysabri (natalizumab).
EDT reported an operating profit of $23m in the quarter, while the BioNeurology business made an operating loss of $13m.
Back in 2008 a flotation or sale of the EDT business was abandoned as a result of the crisis in the financial markets, but analysts now say it could be worth up to $1 billion to a potential buyer as a separate company.
The increase in revenue from the EDT business was principally due to the launch of Acorda Therapeutics’ Ampyra (dalfampridine), which is based on EDT’s MIDAS drug delivery platform.
Ampyra, used to improve walking in patients with MS, is manufactured by EDT at its facility in Athlone, Ireland and brought in nearly $19m for the division in the first-quarter.
EDT also makes license revenues from other drugs based on its NanoCrystal technology for poorly water-soluble drugs, including Pfizer/Wyeth’s immune suppressant Rapamune (sirolimus), Merck & Co’s chemotherapy-associated nausea treatment Emend (aprepitant) and Abbott Laboratories’ Tricor (fenofibrate) for lowering cholesterol.
Elan stressed that no specific timetable has been set for concluding its review of the proposed EDT spin-out.
“There can be no assurances that such a transaction will take place,” it said.
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