Back to top

Analyst Blog

Elan Corporation, plc , a neuroscience-based biotechnology company, recently completed the separation of a significant part of its drug discovery business (the Prothena business). Following the completion of the demerger, the erstwhile Prothena unit of Elan has started operating as an independent, publicly traded entity. The new entity, known as Prothena Corporation plc (PRTA - Snapshot Report), is headquartered in Ireland.

Following the completion of the demerger, the stockholders at Elan on December 14, 2012 (the record date) have received an ordinary share of Prothena for every 41 ordinary shares or American Depositary Shares (ADSs) of Elan owned by them. We note that 1 ADS = 1 share.

Moreover, a wholly owned subsidiary of Elan had subscribed to Prothena shares worth $26 million. They received 18% of Prothena shares (calculated immediately after the subscription was made). Furthermore, the shareholders at Elan directly own 82% of Prothena.

We remind investors that in September 2011, Elan had sold its drug delivery unit - Elan Drug Technologies - to Alkermes (ALKS - Analyst Report) for approximately $1 billion. The merged entity, headquartered in Dublin, Ireland, is known as Alkermes plc.

Per the agreement, Elan received $500 million in cash apart from 31.9 million of Alkermes’ ordinary shares. Elan received a 25% stake in the combined company.

In March 2012, Elan sold 24.15 million shares, or 76% of its stake in Alkermes. Excluding underwriting fees, Elan recorded net proceeds of approximately $381 million from this transaction. Elan retained the remaining 7.75 million Alkermes shares due to certain legal and contractual transfer restrictions.

We currently have a Neutral recommendation on Elan. The stock carries a Zacks #3 Rank (Hold) in the short run. Pharma stocks that currently look better-positioned include Valeant Pharma (VRX - Analyst Report). Valeant Pharma carries a Zacks #1 Rank (Strong Buy).

Please login to or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research


Are you a new Zacks Member or a visitor to

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
PLANAR SYST… PLNR 4.44 +5.21%
BITAUTO HOL… BITA 81.71 +5.12%
CTPARTNERS… CTP 16.66 +4.26%
CHINA BIOLO… CBPO 47.91 +3.30%
MALLINCKROD… MNK 72.94 +2.85%