Prothena will be comprised of Elan’s current drug research businesses including Neotope Biosciences, Onclave Therapeutics and Prothena Biosciences. As part of the transaction, Elan will fund Prothena with ~$125m in cash which, according to the company, should provide sufficient capital until ‘approximately June 30, 2015.’ At that point, the company is expected to have a few drugs further along in the pipeline which should enable it to raise additional capital.
Obviously, the two companies will have very distinct risk profiles and I would expect Prothena to be more boom or bust. In our earlier coverage of the transaction, the Inelegant Investor indicated that he thought the parent looked more interesting in this case, especially given the potential for a takeout. As this Motley Fool piece notes though, that alone isn’t enough reason to buy a company.
For additional information on the transaction, check out the most recent Form 10 and this company presentation (August 13th).
Disclosure: Author holds no position in any stock mentioned.
