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Alkermes aims at ‘Big Biotech’ status with Elan buyout

Posted on 07 July 2011

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Xconomy examines Alkermes' new company strategy in the wake of its acquisition of Elan Drug Technologies. The EDT buyout, explains Luke Timmerman, gives the biotech a steady revenue flow to build on with some prospective upside from products like Bydureon. 

By limiting its borrowing to $450 million, says CEO Richard Pops, the company obtained good terms and a shot at an early payback. "Leveraging a [money-losing] biotech company is reckless, but leverage for a cash-flow positive and stable company is prudent balance sheet management," Pops says.

There are tax implications to this deal. Alkermes considered the value of being incorporated in a country where corporate income taxes are 12.5 percent, compared to a 38 percent combined federal and state tax rate.

Read the full report at Xconomy

 

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