The move would establish Elan BioNeurology and EDT as separate entities with, according to analysts quoted by the Wall Street Journal, the latter being valued at around $950m (€704m).
Elan said that the review “will include detailed assessment of the possible separation, including timing, market conditions and the impact on all of its key constituencies," adding that it expects to make a decision in a few months.
The separation would revive plans mooted in May 2008 when Elan started examining its operating structure after its re-launched multiple sclerosis drug Tysabri (natalizumab) began generating significant revenue.
And, while an inability to find a buyer despite “considerable interest” led Elan to abandon the plan a few months later, the latest announcement suggests the firm still sees value in separating its core business from its contracting unit.
Whether this idea is based on recognition of EDT’s potential in a market hungry for outsourced drug manufacture and delivery technologies or is part of a broader sale plan, as was suggested when the EDT split was first proposed, is unclear.
Either way splitting off the contracting unit would probably have significant benefits both companies, according to Ian Hunter an analyst at Dublin, Ireland-based Goodbody Stockbrokers.
He told the San Francisco Chronicle that: “If EDT is spun off it will probably find it easier to raise capital on the markets to fund further expansion," adding that Elan could use the funds it generates to pay off debt.
Board changes
In other news, Elan announced that its chairman, Kyran McLaughlin, plans to retire from the firm when a replacement can be found.
A second board member, Bill Rohn, former chief operating officer of US drugmaker Biogen Idec with which Elan co-markets Tysabri, will also step down.