The board of Elan has approved the spin-off of its discovery science and Neotope Biosciences from the company, in a move which makes Elan immediately profitable.
Elan said this will see the creation of two independent, highly focused, public companies that will enable investors to align timelines, risk and returns in order to achieve investment objectives.
After the spin-off, Elan will generate growth, immediate and long term profits and expanding margins.
It will consist of three main assets, including its multiple sclerosis drugTysabri.
Headed up by chief executive Kelly Martin and chairman Robert A Ingram, it will employ 90-110 people and will be headquartered in Dublin.
The Neotope Biosciences plc will focus on identifying and translating targets into potential therapies for chronic degenerate and other related disease areas.
It will be lead by chief executive Dr Dale Schenk and chairman Dr Lars Ekman and will employ about 80 people.
The new spin-off will in incorporated in Ireland with operations in San Francisco in California.
Elan shares closed 4.9% higher in Dublin.
Elan Corporation will commit $120-130m start-up capital to Neotope and will retain a 14-18% minority stake in the company.
The deal is still subject to shareholder approval and is expected to be completed by the end of the year.
''By establishing Neotope Biosciences and Elan as distinct businesses - each with its own specific business characteristics and dynamics - we provide investors with important clarity, transparency and choice as it relates to their investment decisions,'' Elan's CEO Kelly Martin said.
''With Elan's commitment to capitalise Neotope's Bioscience, our highly talented scientific team who have previously discovered Tysabri and an approach to immunotherapy for Alzheimer's, will have the resources and time to advance programmes for chronic degenerative diseases, along the drug development stages and provide opportunities for investors to participate in this journey,'' commented Dr Lars Ekman, chairman designate of the new company.
The decision to split the company comes after the failure of an experimental Alzheimer's drug being developed with Pfizer and Johnson & Johnson, although CEO Kelly Martin said it had been planned for more than a year.
The move may fuel speculation that Elan will be a more attractive takeover target for US biotech company Biogen Idec, with which it marketsTysabri.
Mr Martin declined to comment on Biogen's potential bid interest but said there were no obstructions to any company launching a takeover offer and none were planned under the new structure.
Meanwhile, Elan and Biogen Idec have secured additional patent protection on the MS drug Tysabri, taking exclusivity out to 2020 from 2017, Elan's chief executive said today.
Mr Martin told analysts about the extra three years of patent cover during a conference call today.
