Elan cures breach of Tysabri deal and amends terms of transaction

Dublin, Ireland-headquartered drugmaker Elan says that it has cured an 'unintended breach of its multiple sclerosis drug Tysabri (natalizumab) collaboration agreement with US firm Biogen Idec that had been identified by the US District Court for the Southern District of New York. The MS drug is expected to generate annual revenues of $1 billion this year.

Elan's previously announced transaction with Johnson & Johnson has been amended to eliminate in its entirety the strategic financing and collaboration agreement that was the subject of the Court's September 3, hearing and Biogen's previously disclosed notice of breach. Concurrently, Elan has also informed Biogen that it has cured the unintended breach within the time period permitted under its collaboration agreement with Biogen.

Elan has agreed to modify the terms of its pending transaction with J&J, which was previously announced on July 2, 2009, to provide for the completion of all aspects of the transaction announced with the exception that the Strategic Financing and Collaboration Agreement related to Tysabri, and the subject matter of that agreement, have been eliminated and are not now included in the revised transaction.

Under the revised definitive agreement, J&J, through its affiliate, will invest $885 million in Elan in exchange for newly-issued American Depositary Receipts, which will represent 18.4% of Elan's outstanding ordinary shares immediately following the closing. In addition, as previously announced on July 2, 2009, J&J will acquire substantially all of the business, assets and rights of Elan related to its Alzheimer's Immunotherapy Program, through a newly-formed company, Janssen Alzheimer Immunotherapy, and will initially commit up to $500 million to continue the development and launch activities of bapineuzumab, a potential first-in-class treatment that is being evaluated for slowing the progression of Alzheimer's disease, as well as other compounds.

In consideration for the transfer of these rights and assets, Elan will receive a 49.9% equity interest in Janssen Alzheimer Immunotherapy. Elan will be entitled to a 49.9% share of the profits and certain royalty payments upon the commercialization of products under the collaboration with Wyeth.