After consulting with outside financial advisors, in conjunction with the Elan (ELN) board of directors and executive management team, the Ireland-based biotechnology company has determined the recent $12.50-a-share buyout offer from Royalty Pharma undervalues select Elan assets by as much as $4.3 billion, the company announced Wednesday.
According to Elan, its multiple sclerosis treatment Tysabri has an underlying value of approximately $11.85 a share, and possibly as much as $17.15 a share, based on Berenberg Bank estimates of global Tysabri sales. Tysabri values do not take into account operating expenses, and include sales estimates through 2016.
In addition to the Tysabri value calculations, Elan's press release suggests the value of its cash position is equal to $3.65 a share based on its pro forma net cash position of approximately $2 billion, as of March 31. The combination of cash per share and its Tysabri asset that the company has put forward values Elan between $15.50 and $20.80 a share.
Royalty Pharma's recent buyout offer is for $12.50 per Elan share.
Elan Chairman Robert Ingram was quoted as saying, "Royalty Pharma's current bid of $12.50 substantially undervalues these assets and tendering shares at this level would be to the direct detriment to our shareholders."
Royalty recently reiterated its suggestion to Elan shareholders to reject several resolutions scheduled for Elan's shareholder meeting on June 17 that could negate Royalty's offer.
