The board of directors of Elan, an Irish neuroscience-focused biotech, has approved the spin-off of discovery science with the separation of Neotope Biosciences from Elan.

Completion of the transaction will create two independent, highly focused, public companies to enable investors to align timelines, risk and returns.

Neotope Biosciences, adrug discovery business platform originally established in 2010, will focus primarily on identifying and translating targets into potential therapies for chronic degenerative and other related disease areas. When separated from Elan, this entity will continue to focus on innovation, differentiated scientific advancement, unique intellectual property creation and translational capability to transform science into clinical assets.

“With Elan’s commitment to capitalize Neotope’s Bioscience, our highly talented scientific team who have previously discovered Tysabri and an approach to immunotherapy for Alzheimer’s, will have the resources and time to advance programs for chronic degenerative diseases, such as synuclein for Parkinson’s disease, along the drug development stages and provide opportunities for investors to participate in this journey,” said Lars Ekman, chairman designate of Neotope Biosciences. “In the longer term, the team’s heightened focus and dedication to translating unique scientific insight into clinical programs will provide benefits to the field of life sciences across a broad array of diseases for the ultimate benefit of patients. With this transaction, their successes and insights are expected to provide enormous benefit to the world.”

Separately, Elan will focus on generating growth, immediate and long-term profits, and expanding margins. Additionally, this business will be able to utilize an advantageous tax structure and create incremental after-tax earnings to the direct benefit of shareholders.

“For [Elan], the completion of this transaction is a natural progression and final step to becoming a company that generates both profits and growth to the benefit of stakeholders,” said Kelly Martin, CEO of Elan. “The dominant focus will be broadening and deepening patient access to Tysabri on a global basis and registering ELND005 for multiple indications in neuropsychiatry and other symptomatic indications. This move to immediate profitability will enable us to utilize the benefit of the significant accumulated losses that have been built up over the years. We intend to explore ways to share this benefit with our stakeholders through some combination of debt repurchases, share buy backs, dividends or all three.”

Completion of the spin-off is subject to conditions, including approval by shareholders, which Elan will be seeking as soon as is practical. Additional details of the proposed spin-off, including proportionate shareholding and separate financial information relating to both Elan and to Neotope Biosciences, will be provided to shareholders. If the transaction is completed, Elan expects a separate listing of Neotope Biosciences on a U.S. exchange by the end of 2012. Elan will incur a charge upon completion of the transaction.

“This is a bold and logical strategic step as it provides shareholders with the ability to delineate risk, timelines and business characteristics to their own specific investment objectives,” said Robert A. Ingram, chairman of Elan. “All of our previous actions, including most notably the separation of the Elan Drug Technologies business and its merger with Alkermes, as well as the establishment of Janssen AI with Johnson & Johnson in a sharing of the risk/reward around the AIP asset, have been designed to improve the risk/return profile of the company, cluster businesses and assets logically for shareholders.”