Morning Equity Briefing
Elan Corp (USc)
ELN US
Disposes of Prialt
Jack Gorman
| Closing Price | $7.44 | Rating: | Outperform | 30/06/09 |
Elan has disposed of its remaining rights and the sales force associated with pain drug Prialt to fellow Ireland-based company Azur Pharma. The transaction comprises all rights ex-Europe (which Eisai previously acquired) and a 34-person speciality pharma sales force.
Prialt generated $16.5m in net revenues last year, flat year-on-year, and had not met the initial expectations at launch in 2005. The transaction is expected to close in Q2 and will be EBITDA-neutral for Elan. It also means that Tysabri will soon be Elan’s only marketed product.
No financial details on the deal were disclosed. Azur says it will be funded from its existing cash resources, which stood at over $40m at the end of last year. However, it is worth noting that in Elan's Q4 2009 results only a month ago, it wrote down the carrying value of the intangible asset relating to Prialt to $14.6m. It seems reasonable to us that the consideration may not be too far away from this level.