Bids imminent for Elan's contract division

It is believed that a private equity company is most likely to capture the Irish company, with media reports linking Bain, Candover, Texas Pacific Group and Warburg Pincus to the auction.

The sale of the division would provide a welcome cash injection for Elan, which has had mixed fortunes with its products, and allow the company to focus on its drug discovery unit.

EDT supplies contract product development, as well as scale-up and manufacturing services. Its main technology platform, NanoCrystal, is used in a number of commercialised products by companies including Wyeth, Merck & Co and Abbott Laboratories.

Despite EDT generating around 37 per cent of Elan’s total revenues in 2007 the company has decided to jettison the division. The move may help underpin Elan’s share price, which plummeted by almost 60 per cent at the start of August.

This fall followed the news that two more patients taking Tysabri (natalizumab), which Elan markets with Biogen, had contracted progressive multifocal leukoencephalopathy (PML).

These are the first cases since the drug was re-launched with tougher prescription guidelines in the US and Europe in 2006, following three cases of PML the previous year that caused the product to be pulled off the market.

Elan and Biogen have sought to downplay the new cases of PML and emphasise the benefits Tysabri offers to patients.

Biogen spokeswoman Naomi Aoki said: "We said in the past that we expect to see additional cases of PML and the US Food and Drug Administration (FDA) has said as much as well. It is also clearly stated on our label and in all communications around the product and communications with doctors​."

"We believe the risk-benefit profile of the drug remains favourable. Clearly the patients taking the drug made the choice to be on Tysabri because it's such an effective therapy despite being fully aware of the risk of PML​."

Aoki’s comments were given credence by Elan’s results for the first half of 2008, which saw Tysabri sales increase by almost 200 per cent. There are now approximately 31,800 patients taking the therapy.

Biogen had hoped to have 100,000 people taking Tysabri by 2010 but this now appears unlikely. Numbers may be swelled if recently launched Phase I/II clinical trials investigating Tysabri’s efficacy in treating relapsed or refractory multiple myeloma are successful.