Elan hoping to sell minority equity position in company through strategic review

By Jennifer Lanning Drey

Portland, Ore., Feb. 10 - Elan Corp. plc's preferred outcome to the strategic review it has underway would be to sell a minority equity position in the company to a global player, Kelly Martin, chief executive officer of Elan, said Tuesday during the company's fourth-quarter earnings conference call.

Cash proceeds from such a transaction would likely be used to reduce risk on the balance sheet and invest in advancing Elan's pipeline, Martin said.

"The goal of this review of the company's strategic alternatives is to secure access to the necessary financial resources and commercial infrastructure to allow us to accelerate the development and commercialization of our extensive pipeline and product portfolio while maximizing the ability of our shareholders to participate in the resulting longer term value creation," Shane Cooke, Elan's chief financial officer, said during the call.

Elan is pleased with the level of interest received thus far in the process, which was announced in mid-January, Cooke said.

As previously reported, Elan is working with Citigroup Global Markets Inc. to review strategic alternatives for the company that it said could include a minority investment, strategic alliance, merger or sale.

Reducing cash burn

While discussions on potential strategic alternatives continue, Elan's focus for 2009 will be on reducing its cash burn and balance sheet risk while advancing the pipeline, Cooke said.

The company expects to end 2009 with cash and strategic investments of about $200 million after making its final $50 million milestone payment to Biogen Idec for Tysabri, he said.

Elan ended 2008 with cash and investments of almost $450 million.

The net loss for 2008 decreased by 82% to $71.0 million as a result of improved operating performance, the recognition of a deferred tax asset of $236.6 million in 2008 and the inclusion of an impairment charge of $52.2 million in 2007.

Revenues grew by more than 32% to $1 billion in 2008, driven by a solid performance from Tysabri.

"We were pleased with the robust financial performance of the business in 2008 against a very challenging backdrop," Cooke said.

Elan is a Dublin, Ireland-based biotechnology company.

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