Elan sells its Tysabri rights to Biogen; posts 2012 financials

Ireland-based drugmaker Elan Corp (NYSE: ELN) said yesterday that partner US biotech firm Biogen Idec (Nasdaq: BIIB) has agreed to purchase Elan’s 50% interest in multiple sclerosis drug Tysabri (natalizumab), which generates almost all of Elan’s revenues.

On closing, Biogen Idec will gain full strategic, commercial and decision-making rights to the drug, which generated sales for the US firm of $1.6 billion in 2012, an increase of 8% over 2011. Elan shares rose 11% by 10:10 am in Dublin, but later fell into negative territory as investors digested the implications of the sale. The stock has fallen 26% in the past year through yesterday.

Under the terms of the agreement, Elan will move from the current 50:50 business collaboration to an upfront payment of $3.25 billion and a double digit tiered royalty structure for the complete asset, as follows: first 12 months: royalty of 12% of Tysabri global net sales (all indications) ;tiered royalty structure after 12 months; 18% on up to $2 billion of global net sales (all indications); 25% on over $2 billion of global net sales (all indications).
Elan’s chief executive Kelly Martin commented: “This transaction enables Elan and its shareholders to realize, upon close, a meaningful percentage of the current value of Tysabri while maintaining long term cash flow realization through the multi-tiered royalty structure of the complete asset.”