November 10, 2016 / 7:46 AM / 3 years ago

Perrigo to review options for Multiple Sclerosis drug Tysabri

(Reuters) - Perrigo Co Plc reported a higher-than-expected adjusted quarterly profit and said it would review strategic options for royalty rights from sales of multiple sclerosis drug Tysabri.

Birds are seen on the logo of generic drugmaker Perrigo Co outside their new factory in the city of Yeruham, in southern Israel March 2, 2016. REUTERS/Amir Cohen

Shares of the Dublin-based company, which specializes in generic and over-the-counter drugs, were up about 4 percent at $86.75 in premarket trading on Thursday.

Perrigo has been under pressure from activist investor Starboard Value LP to make changes - including exploring options for Tysabri - that will boost its stock price.

Starboard disclosed a 4.6 percent stake in Perrigo in September.

The company’s stock had lost about 42 percent of its value through Wednesday’s close of $83.51 and the company has cut its earnings forecast twice.

Perrigo has blamed much of its troubles on former Chief Executive Joseph Papa who convinced investors to reject a $205 per share cash-and-stock bid from Mylan NV, worth about $26 billion when it was rejected last November.

Papa, now CEO of Valeant Pharmaceuticals International Inc, said Perrigo would be better off on its own.

Perrigo recognized $93 million of royalty revenue in the third quarter related to global net sales of Tysabri. The drug is marketed through a partnership with Biogen Inc, which paid more than $300 million in royalties to Perrigo.

Perrigo, run by CEO John Hendrickson, has hired Morgan Stanley as financial adviser to lead the review process for Tysabri.

Royalty Pharma, a privately held company that specializes in acquiring drug royalties, is among potential buyers, Reuters reported in September, citing people familiar with the matter.

Perrigo reported a net loss of $1.26 billion, or $8.76 per share, for the third quarter ended Oct. 1, compared with a profit of $113 million, or 77 cents per share, a year earlier.

The net loss includes a goodwill impairment charge of $804 million and a brand intangible assets impairment charge of $866 million related to its $3 billion acquisition of Belgian over-the-counter drugmaker Omega Pharma.

On an adjusted basis, the company earned $1.80 per share, beating analysts’ average estimate of $1.58, according to Thomson Reuters I/B/E/S.

Revenue rose 1 percent to $1.35 billion, including sales of $22 million from held-for-sale businesses. Analysts on average were expecting revenue of $1.28 billion.

The company said it expected to report a net loss of $9.04 to $9.34 per share for all of 2016.

Reporting By Aurindom Mukherjee and Akankshita Mukhopadhyay in Bengaluru; Editing by Gopakumar Warrier and Ted Kerr

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