Irish drugmaker Elan will raise more than $3.25 billion by selling its interests in its main drug to partner Biogen Idec and effectively reinvent itself by splashing most of the cash on acquisitions.
Under a deal announced on Wednesday, Massachusetts-based Biogen will take full ownership of blockbuster multiple sclerosis (MS) treatment Tysabri and will make an upfront payment to the Irish group plus royalties on future sales.
While the deal gives Elan scope to return some cash to shareholders as well as strategic flexibility to buy new assets, it leaves its future shape unclear since Tysabri was by far its most important product, responsible for almost all its revenue.
Elan has already spoken to several companies about potential deals and can move quickly over the next 12-18 months once the sale is completed, Chief Executive Kelly Martin told Reuters.
"You can do a lot of things with $3 billion, you can buy companies, molecules, you can partner, you can share risk. The world is our oyster," Martin said in a telephone interview.
"We are not necessarily restricting ourselves to one therapeutic area or one type of clinical asset. We will not be restricted to our past, which was by and large neurological."
Martin said there were hundreds of small- to medium-sized drug companies with capital or capability needs, meaning there was an "enormous amount of transactions" Elan could do.
Shares in Elan, which fell sharply last year after the failure of a highly anticipated experimental Alzheimer's drug, were 8 percent higher at 8.30 euros by 1220 GMT. The stock rose as high as 8.595 euros, its highest since mid November.
The Irish drugmaker has co-marketed Tysabri with the larger U.S. company for 12 years and said it would receive a royalty of 12 percent of Tysabri global net sales for the first 12 months after the deal is completed.
A tiered royalty structure will kick in after that, with Elan, in which U.S. group Johnson & Johnson is an 18 percent shareholder, receiving 18 percent on up to $2 billion of global net sales and 25 percent on any sales over that level.
Sales of Tysabri rose 8 percent to $1.6 billion last year. A filing last month for approval to sell the drug as a first-line treatment for multiple sclerosis could boost sales further.
The companies have long aimed to increase patient numbers over time to 100,000 from the 72,700 at the end of last year, a level that