Good Technology Fit Helped By Cheap Money and Tax Benefits
M&A has been one of the main drivers of the biotech market and today we have more recombinant action as Alkermes (ALKS) of Boston is buying the EDT drug delivery unit of Elan (ELN) of Ireland for $960M. Elan would receive $500M in cash and a 25% stake in the newly incorporated Dublin based Alkermes PLC which would be worth approximately $450M. Elan will reduce debt to $700 but will have $1B in cash and other investments.Morgan Stanley provided $450M of financing.Alkermes gets a doubling of revenue and said its tax bill will be reduced because in Ireland the tax bill is 12.5%. 2/3 that of the U.S. Alkermes will move to Ireland but says no job losses in MA one of the two (San Francisco Bay are #1) leading meccas of biotechnology discovery and development. Both stocks were up about 4%.
The new Company Alkermes PLC will have revenue streams 25 commercial products five of which are high growth and two are marketed by JNJ. The synergy of the deal also includes a strong CNS pipeline with unique drug delivery technology.
Life Science Sector Strong Again Today
Our mid-cap index is up a surprising 2% today boosted by the Alkermes/Elan deal. Among the movers up 2% ++:
Ariad (ARIA), Amarin (AMRN),Array (ARRY), Jazz (JAZZ), Momenta (MNTA), Oncothyreon (ONTY), Optimer (OPTR), Seattle Genetics(SGEN), and Viropharma(VPHM).
The Rayno Life Science Portfolio is up 1.3% with help from Biogen(BIIB), Illumina (ILMN,Regeneron (REGN) and Sequenom (SQNM).