The new company will be called Neotope Biosciences and focus on chronic degenerative diseases

Irish drug maker Elan is to spin off its drug discovery activities as an independent company of 80 employees – just under half the Elan workforce – called Neotope Biosciences. The new company, which will be based in Ireland, but have operations in San Francisco, US, will focus on chronic degenerative diseases.

The remainder of the company will continue under the name Elan and seek to maximise the potential of three assets: the Tysabri (natalizumab) brand for treating multiple sclerosis (MS); ELND005 - a small molecule in Phase II trials in relation to Alzheimer’s disease, among other conditions; and its peripheral involvement in Janssen AI, a collaboration between Johnson & Johnson and Pfizer, based on compounds bought from Elan in 2009. Janssen AI suffered recently when it decided to drop development of its key compound, bapineuzumab, a monoclonal antibody to the amyloid plaques thought to cause Alzheimer’s disease, following poor trial results.

Elan says it expects to list Neotope on a US stock exchange by the end of 2012. The company will commit $120–130 million (£76–83 million) in start-up funding and thereby retain a 14–18% stake.