Royalty Pharma's enhanced offer for Elan continues to undervalue the group's assets, Elan said yesterday in a formal response to the increased bid for the business.

It added that the recent transactions undertaken by Elan, on which shareholders will vote on June 17th, had further widened the gap between the offer and the value of Elan’s shares. Having initially bid $11.25 per share, Royalty revised its cash offer up to $12.50 on May 23rd.

Blockbuster drug
Elan continues to insist the offer "substantially undervalues" the value of the long-term royalty stream from Tysabri, the blockbuster multiple sclerosis drug it developed and sold recently to its US partner Biogen.

Royalty, for its part, continues to point out that it is offering considerably more for those royalties than Elan secured in its Biogen deal.

In its formal response, Elan estimates the per share value of the Tysabri rights, and its net cash, as between $15.50 and $20.80. It accuses Royalty of discounting royalties after 2020, which it says runs in the face of projecitons that Tysabri revenues will grow beyond that point.

It says Royalty Pharma’s bid “currently undervalues these assets by up to $4.3 billion”.

The two sides are engaged in increasingly vocal exchanges.

"Shareholders face significant harm if Royalty Pharma reaches more than 50 per cent acceptance," Elan warns, holding out the possibility of holdout shareholders being left in limbo. Royalty Pharma is a private investment firm whose business model is all about buying assets on the cheap and generating value for their private investors," the Elan document states.

“The revised offer is no more than a calculated attempt to acquire Elan at a substantial discount at the expense of our shareholders.”

The company said that a series of deals announced in recent weeks were all “value accretive”, and widened the gap between Royalty Pharma’s “inadequate” offer and the fair value of Elan’s shares.