Irish neuroscience-focused biotechnology company Elan Corp has snubbed Royalty Pharma's $6.6-billion unsolicited takeover offer and is planning to go ahead with $1 billion share buyback program next week.

The Dublin-based drug maker brought forward its earlier than previously planned share buyback to next week and said that it would commence a tender offer from Monday 11 March by way of a ''Dutch auction'' for which it has set a price range of $11.25 to $13.00.

New York-based Royalty Pharma, which buys royalty streams of patented drugs, had on 26 February launched a hostile $11 per share bid for Elan, after it failed to get a response from Elan's management to its informal offer made on 18 February.

The offer was at a mere 4-per cent premium to Elan's closing price on 25 February on the New York Stock Exchange.

The hostile bid came just three weeks after Elan 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)

Under the royalties plan, Elan will receive from Biogen Idec 12 per cent of sales for the first 12 months and after that, 18 per cent on sales up to $2 billion and 25 per cent on sales of more than $2 billion.

Elan had rejected Royalty Pharma's bid as too low and conditional and instead offered to share part of Tysabri's proceeds with shareholders thrugh a proposed buy share back worth $1 billion and also pay two dividends annually from the 20 per cent of the royalties to be received from the deal.

While announcing these incentives to shareholders last week, Kelly Martin, CEO of Elan had said, ''As announced on 6 February, the restructuring of the Tysabri collaboration with Biogen Idec enables us, upon close, to unlock value to the direct benefit of our public shareholders. These value creation initiatives consist of three related but distinctive components - a $ 1 billion dollar share repurchase program, a highly-efficient cash dividend that directly links shareholders to the long term performance and cash flow generation of Tysabri and lastly, the addition of specific business assets which will allow for diversification across molecules, therapeutic areas and geographies.''

Royalty Pharma has criticised Elan for not taking its bid to its shareholders and deliberately offering sops to them.

Royalty Pharma now plans to appeal directly to some of Elan's major shareholders like Johnson & Johnson, Fidelity Management & Research, Invesco Asset Management and Matt Strobeck, a former partner at Boston-based Westfield Capital Management Co, who it feels, will back its offer.

The New York-based company this week said that it ''remains committed to acquiring Elan on the terms set out'' in its offer. ''Royalty Pharma is ready and able to move quickly to implement an offer and believes that it will be able to complete due diligence in 20 days.''

Founded in 1996, Royalty Pharma invests in the pharmaceutical industry and currently holds rights to 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.