Elan Sees Problems on Alzheimer's Drug; Puts Itself Up for Sale

(MoneyWatch)  Elan, the troubled Irish pharma company, has put itself up for sale just as it emerged that it will spend another six months testing bapineuzumab, its experimental Alzheimer's treatment. The drug has previously been linked to brain swelling in some patients. The sale raises the possibility that Elan's bizarre managers -- spread across three continents -- could be ousted.

One analyst, David Moscowitz of Caris & Co., told Bloomberg that bapineuzumab has the potential to be "the biggest-selling medication ever, topping the $12.7 billion in annual sales for Pfizer Inc.'s cholesterol treatment Lipitor." But if the drug has safety issues then it's worth "zero," he said.

The company said in a statement it had hired Citibank to explore "strategic alternatives":

The range of alternatives that will be assessed could include minority investment or strategic alliance, a merger or sale.

Elan's situation is enormously complicated. Bapineuzumab is being developed in conjunction with Wyeth. According to the Irish Independent:

The $41bn pharmaceutical firm Wyeth is also prevented from taking over Elan "in some circumstances" under the terms of a development joint venture.

Sales of Elan's other big drug, Tysabri for MS, are slowing. That drug is a joint venture with Biogen. Biogen has the right to buy Tysabri outright if Elan is sold. That right lasts until 2010. Until then, Biogen is also banned from taking over Elan itself.

Here's what CEO Kelly Martin told Reuters about his own company:

As far as valuing the overall company, Martin divided Elan into three segments: the drug delivery business, Tysabri and its pipeline.

"The swing factor is -- do you think bapineuzumab is a drug or not," the CEO said.

Any takeover could lead to the ouster of Kelly and his current management. That management consists of Martin in New York, a CFO in Ireland, R&D in San Francisco, and general counsel in Pennsylvania. Here's what Crabtree Partners investor Jack Schuler said recently about them:

"Lack of relevant industry experience, gross incompetence related to the management of Tysabri and its partnership with Biogen, and egregious misuse of company resources have caused investors to lose confidence in Mr. Martin and his management team."

It seems there's an opportunity to at last get rid of them.

• Previous BNET coverage of Elan:
• Elan "Poison Pill" Deal With Biogen Prevents Rumored Pfizer Takeover
• Elan's Pennsylvania Lawyer Once Again Makes News