Indianapolis-based Eli Lilly and Co. (NYSE: LLY) says it plans to spin off its Greenfield-based Elanco Animal Health business as a separate company. The decision comes after completing a review of Elanco that began a year ago. Lilly says it plans to begin the process for an initial public offering for a less than 20 percent minority stake in Elanco in the coming weeks. It expects to complete the IPO by year’s end. The announcement was delivered along with Lilly’s most recent earnings report, which shows a second quarter loss of $259.9 million, compared to a net income of more than $1 billion during the same quarter last year.
Details of the Elanco offering, including the price range and number of shares, will be announced at another time. Lilly Chief Executive Officer Dave Ricks calls the decision strategic and says it "will maximize the after-tax value for Lilly shareholders and provide Lilly with even greater focus on our human pharmaceutical business."
The quarterly loss, Lilly says, can be attributed to costs including acquired in-process research and development charges such as the $1.6 billion purchase of ARMO Biosciences Inc. in California and the deal for AurKa Pharma Inc. in Canada, which involves an upfront payment of $110 million. Ricks added "Lilly delivered strong results once more in the second quarter in terms of operational performance, pipeline advancements, and strategic objectives. The increase in our worldwide revenue was fueled by volume growth of our new medicines, while we also maintained a keen focus on containing costs and improving productivity. Our pipeline continued to demonstrate our commitment to scientific innovation, highlighted by forward progress for key molecules, several positive late-stage data readouts and the addition of promising new assets through business development."
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