Elan reported $344 million in Tysabri revenues for the quarter ending in March. It has said it will pay out 20% of future Tysabri royalties in the future. Based on March quarter revenues that would come to $68.8 million available for dividends in the quarter. Given that Elan after the buyback now has 510 million shares outstanding that comes to a projected quarterly dividend of a little over $.13 a share. Note: Elan says its dividend will be paid semiannually with the first dividend payable in the 4th quarter. Thus assuming Tysabri sales will continue to grow, one should expect a dividend of at least $.26 a share in the 4th quarter. With two payments a year, that would come to at least $.52 a share. At the current price of $11.99 that is a yield of 4.3%. Not great but not bad either in this environment.
Note I have assumed Tysabri revenue equals Tysabri royalties.
"Note I have assumed Tysabri revenue equals Tysabri royalties." That is not a correct assumption. Total revenues for last year were just over $1.6B. At 12% royalty Elan would receive $156mm for a year and pay dividends of 20% of that or $31.2mm per year. That spread over 510mm shares would be $.061 for the year and I would round up for sales increases to $.07. I'm expecting a dividend in the 4th quarter of about $.03 or $.04 (depending upon how many months they put in the first calculation) and in the Q2-14 of probably $.04. Thence the royalty rate will increase to 18% and sales may grow to $1.7 or more. So $306mm for 12 months, EPS of $.60 and $.06 paid in dividends each half.