Elan has dismissed speculation that it is in talks with its drug development partner, Biogen Idec, about a merger of the two companies.
Shares in the Irish drugmaker gained more than 8 per cent in Dublin yesterday morning following a weekend report that Elan and Biogen were in talks on a link-up that could be worth more than €8.5 billion.
But Elan, which has been working with Biogen to develop the multiple sclerosis drug Antegren, denied yesterday that it was in takeover talks with the US company.
"Elan Corporation advises that it is not in negotiations or discussions with Biogen Idec regarding any form of merger or business combination between the two companies," it said in a statement.
However, the two pharmaceutical firms are working closely together on the development of Antegren, which is currently under consideration by the US Food and Drug Administration which is due to make a decision on the product by November 25th.
Analysts noted that Elan and Biogen are also in talks on how to split the profits from Antegren if the drug proves successful.
"Basing speculation on the current level of negotiations between both companies could be on a false premise," said Mr Ian Hunter, pharmaceutical analyst with Goodbody Stockbrokers.
"We understand the companies are currently finalising the details on how they are going to account for the 50/50 split in Antegren profits given that Biogen Idec is manufacturing the product and will be leading the marketing for the multiple sclerosis indication," he added.
The shares gave up some ground after the company dismissed the merger speculation but still closed higher on the day.
In Dublin, they finished 5.6 per cent higher at €17.95 while in New York, their main market, they added 6.54% per cent to $22.65 (€18.11).
Analysts believe the stock is likely to remain volatile ahead of the FDA decision on Antegren, the release of third quarter results next week and as talks with the SEC near a conclusion.
The prospect of a resolution to a two-year old Securities and Exchange Commission inquiry into Elan's accounting practices has fuelled speculation that Elan may now become a takeover target.
Under a deal struck last year, Biogen Idec is prohibited from launching a hostile bid for Elan before 2010 but the companies' joint interest in Antegren has led some market observers to believe an agreed link-up between the two companies remains a possibility at some future date.
