Royalty asked ELN shareholders in its statement on February 25 to decide if they want to remain invested in a company that will consist of cash and the Tysabri Royalty, "... while Elan's management pursues its announced strategy." They encouraged shareholders to sell their shares to Royalty for a cash amount that Royalty Pharma believes reflects the full value of Elan today. It won't be an easy decision either way.
The whole drama here reflects what an enormous prize the intellectual property and patents of the biopharmaceutical companies are worth. Right now ELN shareholders and potential shareholders know that what they own (mainly the Tysabri Royalties) is valued for at least $11-a-share.
Now if we continue our sleuthing and find the next undervalued and overlooked biopharmaceutical company with products and patents worth a small fortune, we may be able to experience what ELN shareholders are enjoying. Might that be a company like Amarin (AMRN)? Stay tuned.DISCLOSURE: As of the time of publication the author was not long any of the shares of companies mentioned in this article. Jim Cramer and Stephanie Link actively manage a real money portfolio for his charitable trust- enjoy advance notice of every trade, full access to the portfolio, and deep coverage of the latest economic events and market movements. Follow @m8a2r1