Issue Date: September 21, 2009
Elan Alters J&J Pact
Elan has caved to pressure from Biogen Idec, as well as a federal court, to amend its proposed collaboration with Johnson & Johnson. Elan has withdrawn the “Tysabri option” that angered Biogen; as a result, J&J will pay $885 million, a discount from $1 billion, for an 18.4% stake in Elan.
Biogen was rankled by a clause in the Elan-J&J deal regarding the multiple sclerosis (MS) drug Tysabri, which Biogen and Elan comarket. The clause gave J&J the option to buy Biogen’s rights to Tysabri should Biogen ever be acquired.
Tysabri had sales of $813 million last year and is a key product for both partners. Biogen has few other growth engines in its portfolio and is heavily invested in being a leader in the MS market. Elan, meanwhile, has struggled to come up with the cash to progress its pipeline and even considered selling itself earlier this year.
Biogen said the J&J option breached the Tysabri agreement and claimed it would assume full rights to the drug if the situation was not fixed within 60 days. Elan sued to maintain its rights to Tysabri, but a Manhattan federal court judge ruled that it was in the wrong.
The other terms of the Elan-J&J drug pact have not changed. J&J will acquire Elan’s interest in an Alzheimer’s immunotherapy collaboration with Wyeth. Elan will still get $500 million toward the development of bapineuzumab, a monoclonal antibody in Phase III trials.
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