By Padraic Halpin

DUBLIN, June 3 (Reuters) - Irish drugmaker Elan Corp Plc is running out of options to forge a partnership with a large pharmaceutical company after the collapse of talks with Bristol-Myers Squibb Corp, analysts said on Wednesday.
Strategic discussions between the two companies broke down in the early stages last month, a source familiar with the matter told Reuters on Tuesday, narrowing Elan's room for manoeuvre in a strategic review which started in January.
"The market has run through a fair number of partners by now -- we've had Pfizer, Roche, Bristol-Myers Squibb and Ljunbeck. There may not be that many left looking at it," Goodbody Stockbrokers analyst Ian Hunter said.
Ireland's biggest drugs maker, a co-marketer with Biogen Idec of multiple sclerosis drug Tysabri, hired Citigroup in January to conduct a review of the business and said at the time a merger or sale of the company was possible.
Elan, which is also co-developing experimental Alzheimer's drug Bapineuzumab with Wyeth, has 1.15 billion euros ($1.6 billion) worth of debt due in November 2011 and is burning through cash at a rapid rate.
Bristol-Myers was reported to be negotiating for a minority stake in Elan, but another source said the talks were complicated by price and Elan's drug partnerships.
"The difficulty is what are you going to gain for a 20 percent stake in Elan?" Hunter said.
"It's 20 percent of a 50 percent share of Tysabri and of Bapinuzamab which still has the risk of coming through Phase III trials to markets."

Analysts say 500 million euros would be enough for Elan to roll over its debt and if a strategic partnership is not forthcoming, the drugmaker could raise the equity itself or combine such a move with selling some of its pipeline.
The sale of its share in Tysabri to Biogen is also a possibility, but one unlikely to be chosen until complete Phase III results for the Alzheimer's programme are available.
"Positive news (on Elan's Alzheimer's drugs) is probably a good year and a half away," Merrion Stockbrokers analyst Sam Farthing said, referring to full Bapinuzamab trial results that are not expected until midway through 2011.
The company tried last year to sell its profit-generating drug delivery business, but was unable to complete a transaction amid collapsing credit markets.
While a sale of its EDT business remains an option -- though likely at a lower price than the $1.4 billion estimated last year -- a partnership is still the preferred choice.
"The most positive result would be an equity investment from a serious trade player and the market would then have to reassess the potential for success in the pipeline," Farthing said.
"If they don't find a trade investor at a reasonable price, then the risk is the market is going to say if there is no one in the industry willing to invest in Elan, then why should a regular investor?"
(Editing by David Holmes) ($1=.6999 Euro) Keywords: ELAN/OPTIONS

(padraic.halpin@reuters.com; Reuters Messaging: padraic.halpin.reuters.com@reuters.net; +353 1 500 1504)

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