LONDON Ireland's Elan ELN.I said on Monday it would spin off its Neotope drug discovery business platform as a separate public company in a move making Elan immediately profitable.
The decision to split the company comes hard on the heels of the failure of an experimental Alzheimer's drug being developed with Pfizer (PFE.N) and Johnson & Johnson (JNJ.N), although Chief Executive Kelly Martin said it had been planned for more than a year.
The move may fuel speculation that Elan, shorn of its loss-making research arm, will be a more attractive takeover target for U.S. biotech company Biogen Idec (BIIB.O), with which it markets the multiple sclerosis drug Tysabri.
Martin declined to comment on Biogen's potential bid interest but told reporters there were no obstructions to any company launching a takeover offer and none were planned under the new structure.
Completion of the spin-off is expected by the end of 2012, with the separate research arm listed on either the New York Stock Exchange or Nasdaq.
Elan is targeting $1.00 earnings per share by 2015 with the new set-up. Its shares rose 1 percent in early trade.
By separating the Neotope operation, Elan will be left with a "core" business consisting of Tysabri, as well as an experimental neuropsychiatry drug in mid-stage tests and the Alzheimer's programme.
(Reporting by Ben Hirschler; Editing by David Holmes)