Posted: 8 month(s) and 21 days(s) ago   |   0 Comment(s)   |   Rating: 0 0
Posted by: ToddShriber

Elan (ELN.NYSE), the Irish biotech firm, rose 60 cents, or 8.6%, to $7.60 making the stock the biggest gainer on the New York Stock Exchange. Volume was nearly 13 times the daily average on news that pharma giant Johnson & Johnson (JNJ.NYSE) purchased a $1 billion in stake stake in Elan's portfolio of experimental drugs to treat Alzheimer's disease.

Elan told the Street it was exploring strategic alternatives earlier this year, and while the acquisition of J&J is not an outright purchase of Elan, we cannot rule such a move out of the equation due to the fact that big pharma companies are desperate to bolster their drug pipelines. Acquisitions of more nimble and small biotech companies represent the perfect way to boost pipelines.

Elan said it plans to use the new funds to cut its debt by 70% to about $400 million. Moody's Investors Service said it has placed Elan's ratings under review for a possible upgrade, press reports noted.

Sales of all Alzheimer's drugs totaled $3.4 billion in the U.S. last year, according to industry data. The Street seems to think J&J can make Elan's Alzheimer's treatment bapineuzumab a success because it has better resources than Elan does. I would agree and if J&J eventually takes out Elan via an full acquisition, even better.

For more on Elan, go here: http://www.elan.com

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