Royalty Pharma raises offer to $6.4 bn for Irish drugmaker Elan

Royalty Pharma, US firm that invests in royalty streams from pharmaceuticals, yesterday sweetened its offer to buy Elan Corp by 12 per cent to $6.4 billion although the Irish drugmaker continues to resist the takeover and splurges money from the sale of its drug Tysabri on rebuilding its business and wooing shareholders.

In late February, New York-based Royalty Pharma, which buys royalty streams of patented drugs, launched an unsolicited $11.25 per share or $6.6-billion (€5 billion) bid for Elan.

The sweetened offer came just three weeks after the Dublin-based drug maker sold its interests in its multiple sclerosis treatment drug Tysabri, to its US partner Biogen Idec for $3.25 billion plus multi-tiered future royalties on sales of the drug. (See: Biogen Idec to pay Elan Corp $3.25 bn plus for full rights of multiple sclerosis drug Tysabri)

Elan had rejected Royalty Pharma's conditional bid as too low and instead offered to share part of Tysabri's proceeds with shareholders through a proposed share buy back worth $1 billion and also pay two dividends annually from the 20 per cent of the royalties to be received from the deal. (See: Elan Corp snubs Royalty Pharma, goes ahead with $1 bn share buyback program)

Since then, it has bought back shares worth $1 billion and paid $1 billion to US-based biotech company Theravance for 21 per cent of the future royalties on four of its experimental respiratory medicines developed in partnership with GlaxoSmithKline and proposed to acquire two small rare disease drugmakers for $380 million.

Elan also yesterday said that it will sell one of its drugs in development and buy back $200 million in shares, as well as issue $800 million of debt.

Royalty Pharma, which has now increased its $11.25 per share offer to $12.50 per share or $6.4 billion, said that its offer is contingent on Elan shareholders voting against the Theravance transaction and all other transactions announced yesterday that are to be put to vote.

''The Theravance transaction public disclosure suggests that the transaction was pursued in haste and without critical confidential information which could significantly impair the value of the asset,'' Royalty said in a statement. ''Royalty Pharma expects that the same may be true of the transactions announced today.''

Founded in 1996, Royalty Pharma holds rights 37 approved and marketed pharmaceutical products, including Johnson & Johnson's Remicade, Merck's Januvia, Sloan-Kettering Cancer Center's US royalty interest in Amgen's Neupogen drug and Gilead's Atripla.

The company had sales $1.39 billion last year.