Elan Corp. plc continued its sell-off, and said it is progressing nicely toward its goal of raising $1 billion by the end of 2003.
The divestiture of the antifungal product Abelcet to Enzon Inc. was completed Friday, for which Elan received a cash payment of $360 million. On Monday, Elan, of Dublin, Ireland, said it is selling its subsidiary, Athena Diagnostics, in a move that will bring in another $82 million in cash.
Sunny Uberoi, Elan spokesman, when asked if the company was on its way to reaching its financing goal, said, "We are. With the recent divestitures, we are up to about $640 million."
In the summer, Elan made public its recovery plan, looking to mend a company implosion that began early in 2002 when an article in the Wall Street Journal suggested Elan had transferred certain research and development activities into off-balance-sheet vehicles. An SEC probe followed. Throw in profit warnings in the first quarter, further questions about Elan's financial stability and being downgraded to junk bond status by Standard & Poor's, and suddenly Elan found itself trading at a dollar and change. In the past year, the company's stock has traded as high as $46.24 and as low as $1.03.
To right itself, first Elan and Donal Geaney, its chairman and CEO, separated. Elan Director Garo Armen took over as chairman and outlined a plan in which the company would restructure, reduce its focus and gather at least $1 billion in cash to shore up its financial moorings. The company also said it was narrowing its focus to neurology, pain and autoimmune diseases. There has been a flurry of divestitures since then, and Uberoi said industry observers can expect "further assets to be sold."
Elan's stock (NYSE:ELN) rose 21 cents Monday to close at $2.45.
Abelcet, a lipid complex formulation of amphotericin B, is designed to treat patients with invasive fungal infections related to cancer, organ transplantation and other conditions. The drug originally was developed by The Liposome Co., of Princeton, N.J., which was acquired by Elan for $587 million in stock in May 2000. The deal also includes the operating assets associated with the development, manufacture, sales and marketing of Abelcet in North America, including a 56,000-square-foot manufacturing facility in Indianapolis. Enzon hired certain Elan sales and plant personnel as part of the transaction. The agreement was originally announced in October. (See BioWorld Today, March 7, 2000, and Oct. 3, 2002.)
Elan acquired Athena Diagnostics in 1996 when it bought Athena Neurosciences Inc. for $600 million. The diagnostics unit provides esoteric testing services in the areas of neurogenetic diagnostics, peripheral neuropathy, paraneoplastic diagnostics, Alzheimer's disease diagnostics and neutralizing antibody detection assays. Elan agreed to sell all of its stake in of Athena Diagnostics to Behrman Capital and certain affiliated investment funds for about $122 million. But as a result of certain contractual payments, Elan expects to see $82 million in cash from the sale. (See BioWorld Today, March 19, 1996.)
The Athena divestiture is expected to close in the first quarter of 2003. Other recent moves made by Elan include the restructuring of a royalty agreement for the pain product Avinza with San Diego-based Ligand Pharmaceuticals Inc. that brought Elan cash of $100 million; the termination of a joint venture with Isis Pharmaceuticals Inc., of Carlsbad, Calif.; and the selling of rights to the cancer pain product Actiq in 12 countries back to Cephalon Inc., of West Chester, Pa., for $50 million in cash. All have come in the past two months. (See BioWorld Today, Oct. 4, 2002; Nov. 7, 2002; and Nov. 14, 2002.)
Elan's Antegren, a humanized monoclonal antibody, is from a class of potential therapeutics known as alpha 4 integrin inhibitors designed to prevent migration of inflammatory cells from blood vessels to sites of inflammation. Elan and Biogen Inc., of Thousand Oaks, Calif., are collaborating on the development, manufacturing and marketing of Antegren, which is in two Phase III studies in multiple sclerosis and one in Crohn's disease.
The $1 billion mark for Elan certainly seems obtainable, but Uberoi said the amount is what Elan "has to raise." If things go as planned, it would actually "go beyond the billion" by the time 2004 rolls around. The search for a new CEO continues, but Elan should announce its recruit in early 2003, Uberoi told BioWorld Today.
No one would classify Elan's year thus far as a pleasant one, but perhaps the worst is behind it.
"Elan is focused on those three therapeutic areas now," Uberoi said. "And it also has a product, Antegren, for MS and Crohn's disease and it has the best Alzheimer's disease program in the world.
"It is now implementing its recovery plan and it, to date, has been successful."