Elan Spinoff Of Prothena Set For This Week, Will Trade Under PRTA Ticker

Elan (ELN) shareholders approved the separation of its drug discovery business, Prothena, at an Extraordinary General Meeting (EGM) last week. The company also released an updated timetable for the transaction and the distribution will take place on December 20th, with shareholders of Elan receiving 1 share of Prothena for every 41 shares of Elan owned as of the date of record (Dec 14th). Prothena is expected to trade on the Nasdaq under the ticker ‘PRTA’.

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.