Elan shares gain as it plans to share Antegren profits

Shares in Elan gained ground yesterday after the firm told investors how it planned to share the profits on Antegren with Biogen Idec.

Elan and Biogen are together developing Antegren, which is seen is expected to be approved for the treatment of Multiple Sclerosis in the US before the end of this month.

The drug is also being developed for the treatment of Rheumatoid Arthritis and Crohn's Disease.

Analysts have estimated the global market for the drug could be worth about $4 billion (€3.1 billion) by 2008 in the treatment of MS alone.

The two companies were yesterday at pains to explain that they are operating an arm's length agreement, rather than a partnership or joint venture, on Antegren.

They said they would share profits from the product on a rough 50/50 basis, according to a prescribed accounting relationship.

This will see Biogen booking all non-US revenues and then paying Elan half of pre-tax profits and expenses. Elan's share will then be displayed as revenues.

In the US, Elan will purchase Antegren from Biogen at a price to be agreed at the start of each quarter.

This price will reflect the cost of manufacturing the drug and roughly half of the margin the two companies expect to draw from it.

Elan will record the US product revenues on its balance sheet. This means its US revenues will be boosted, even though its US profit margin will not reflect this. The opposite position will apply elsewhere.

Elan shares closed 49 cents stronger at $26.60 in New York last night.