LOS ANGELES (MarketWatch) � Investors applauded Biogen Idec Inc.�s plan to assume the rights to the multiple-sclerosis drug Tysabri from Elan PLC for $3.25 billion by boosting Biogen stock to an all-time high while punishing Elan shares in early trading Wednesday.
Reuters Enlarge Image A pedestrian passes the sign outside the headquarters of Biogen Idec Inc. in Cambridge, Massachusetts June 18, 2008.Biogen BIIB �stock jumped $3.62 to $160.98, a gain of more than 2%, on the news, which would end the company�s previous 50-50 split arrangement with Elan for the drug. But Elan ELN �shares tumbled more than 10% to $9.40.
Biogen is estimating that the deal will lift 2013 earnings by 20 to 30 cents a share for GAAP, and 50 to 60 cents a share non-GAAP.
One analyst suggested that Biogen is looking down the road on its own exclusive MS treatment known as BG-12.
�I believe Biogen�s board is intensely aware that the long term future of the company depends in part on how they deal with the eventual loss of patent exclusivity on BG-12 sometime in the mid/late-2020s,� Mark Schoenebaum of ISI Group said in a note to clients. �By that point, BG-12 could be the dominant MS therapy. And then it will suddenly go to zero.�
John Sonnier of William Blair applauded the deal.
�We like this transaction because it gives Biogen Idec control over Tysabri and further simplifies operations with the drug. We also believe this purchase represents a good use of cash and note that a majority of the cash used to make the up-front payment will come from international cash,� he said in a note.
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