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Elan to spin out drug discovery

August 14, 2012 12:37 AM UTC

Elan Corp. plc (NYSE:ELN) announced plans to spin out its early stage drug development operations into a public company called Neotope Biosciences plc. Neotope will be incorporated in Ireland with operations in South San Francisco, Calif., and will have about 80 employees. Elan will seed Neotope with $120-$130 million and retain a 14-18% stake in the newco, which is expected to list on a U.S. exchange by year end. Neotope will develop therapeutics targeting alpha synuclein (SNCA), melanoma cell adhesion molecule (MCAM; MUC18; CD146), tau and amyloid and hopes to submit three INDs by 2015.

As a result, Elan said it will immediately become profitable, with an expected 2013 EBITDA of about $400 million in 2013 and an EPS target of $1 by 2015. Elan will retain autoimmune drug Tysabri natalizumab, for which it recognized 2Q12 revenue of $288 million. The company markets the drug in the U.S., while partner Biogen Idec Inc. (NASDAQ:BIIB) markets it elsewhere. Elan will also keep ELND005, a formulation of scyllo-inositol that the company plans to test in symptomatic Alzheimer's disease indications such as bipolar disorder. In 2010, the product missed the co-primary endpoints in a Phase II trial in AD. ...