Elan to unlock benefits for shareholders from Tysabri deal

The board of Ireland-based drugmaker Elan Corp (NYSE:ELN) has approved the decision to initiate a unique cash dividend policy enabling its shareholders to benefit directly from the long term cash flow generated by the multiple sclerosis drug Tysabri (natalizumab), rights to which it recently sold to partner Biogen Idec (Nasdaq: BIIB) in a transaction that will provide it with $3.25 billion upfront as well as a sales royalty stream (The Pharma Letter February 7).

News of the deal was also followed by the announcement of an unsolicited $6.55 billion takeover offer from Royalty Pharma, which Elan has described as “highly opportunistic” (TPL February 26).

The dividend program will be directly linked to Tysabri market performance calculated as a percentage of the Tysabri royalty paid to Elan from Biogen Idec as a result of the recently announced Tysabri restructuring. The initial percentage to be paid out directly to shareholders is 20 % of those royalties. There is no cap to the dividend cash payments that will be generated from this direct link between shareholders' equity and the long term cash flow of Tysabri. This dividend structure gives shareholders the right to enjoy unlimited participation in the upside from the Tysabri sales increase which we anticipate for the future.