Elan has taken the first small step in its $1.5 billion (€1.54 billion) asset disposal programme, raising more than $40 million from the sale of marketing rights to a hypertension treatment.
The troubled pharmaceutical company said it had entered into a licensing agreement giving California-based Watson Pharmaceuticals exclusive marketing rights to nifedipine tablets in the US.
Nifedipine, the generic version of Bayer's Adalat CC product, is used in the treatment of high blood pressure.
Elan declined to disclose the financial details of the transaction but market sources said that it stood to receive an upfront payment of between $40 million and $50 million upon Watson's launch of the drug. It will also receive ongoing payments for manufacturing the drug. Watson is expected to launch it, in 30 milligram and 60 milligram dosage strengths, as quickly as it can and possibly as early as next week.
"This agreement represents an important step in leveraging value from Elan's drug delivery products and implementing our asset divestiture programme," Elan's chairman Dr Garo Armen said.
It also satisfies Elan's recent settlement with the US Federal Trade Commission which had accused Elan, and Toronto-based Biovail, of dividing up the market for the generic version of Adalat.
"It's small in the scheme of things but it's a start," said Mr Peter Frawley, analyst with Merrion Stockbrokers.
Shares in Elan rose again yesterday, closing 67 cents higher in Dublin at €3.42, a 49 per cent gain on the week.
In New York, where the shares are mainly traded, they climbed by 12.5 per cent to finish at $3.33.
The stock has risen strongly in recent days amid speculation of a takeover. Elan shares gained 18 per cent in New York on Wednesday, and as much again on Thursday, as pharmaceutical giant Bristol-Myers Squibb was mentioned in connection with a bid.
A spokeswoman for Bristol-Myers Squibb declined to comment on the speculation yesterday but analysts remained sceptical that a bid for Elan was in the offing.
"I think it's fantastical," said one analyst, who said that Bristol-Myers Squibb had its own difficulties without taking on Elan, especially as the outcome of the Securities and Exchange Commission (SEC) investigation into the Irish group was still unknown.
"Elan would be a good fit for Bristol-Myers Squibb but with the SEC hanging over it, it's unlikely there would be a bid at this stage," Merrion's Mr Frawley said.
He added that if Bristol-Myers Squibb was interested at all, it would probably bid for the individual Elan business units that were for sale.
Meanwhile, Elan has also begun the process of unwinding the 55 joint-venture agreements in which it is involved.
Earlier in the week, it ended a joint venture with Sheffield Pharmaceuticals and signed a licensing agreement that gives Sheffield full rights to its Tempo Inhaler and Premaire Delivery System.
Under the modified arrangement, Elan relinquished its right to gain ownership of the venture, but can still receive royalties on the venture's two products.
