Biogen Idec purchases TYSABRI interest from Elan
Transaction builds off of, terminates previous 50/50 collaboration
WESTON, Mass.—Biogen Idec Inc. has announced its plans topurchase biotechnology company Elan Corp. plc's interest in TYSABRI(natalizumab), a monoclonal antibody indicated for the treatment of Crohn'sdisease and relapsed multiple sclerosis. Once the transaction has closed, theprevious collaboration agreement between the companies—in which Biogen Idec andElan split worldwide profits for TYSABRI 50/50—will be terminated, as will theagreement's change of control provisions. Biogen Idec will gain full strategic,commercial and decision-making rights to the product.
Per the terms of the transaction, Biogen Idec will pay Elan$3.25 billion from its cash reserves once the deal closes, and will also makefuture contingent payments to Elan equal to 12 percent of global net sales ofTYSABRI for the first 12 months. After that point, Biogen Idec will makecontingent payments of 18 percent on annual global net sales of the product upto $2 billion, and 25 percent on annual global net sales that exceed $2 billion.In 2014 only, the threshold of $2 billion will be pro-rated for the portion of2014 that remains after the first 12 months expire.
"This is a natural next step for Biogen Idec and TYSABRI,and it underscores our deep, long-term commitment to improving the lives of MSpatients around the world," George A. Scangos, Ph.D., CEO of Biogen Idec, saidin the press release announcing the agreement. "TYSABRI is a remarkablyefficacious drug, and with the increased awareness of our risk stratificationcapabilities, we believe MS patients' use of TYSABRI will continue to expandover the long-term. Full ownership will improve our ability to navigate itsrole as part of our leadership in MS. We appreciate Elan's tremendouspartnership and the productive approach to our discussions that led to atransaction that benefits the shareholders of both companies. We expect asmooth transition to the closing of the transaction."
A Phase IIIb study was announced in January of last year totest TYSABRI's effectiveness as a treatment for secondary-progressive multiplesclerosis. In previous studies of multiple sclerosis, the treatment proved tohave demonstrable effectiveness, with a 68-percent relative reduction inrelapse rate after two years when compared to patients taking the placebo, anda 42- to 54-percent relative reduction in disability progression risk.
Both Biogen Idec's and Elan's boards of directors haveapproved the transaction, which Biogen Idec expects to be accretive to 2013GAAP earnings per share by roughly 20 to 30 cents, and accretive to non-GAAPearnings per share by 50 to 60 cents. The transaction is subject to customaryclosing conditions, including the review process under the Hart-Scott-RodinoAntitrust Improvements Act, and is expected to close by the end of the secondquarter.
Biogen Idec brought on Centerview Partners LLC as itsexclusive financial advisor for the transaction, with Ropes & Gray LLPacting as its legal counsel.
SOURCE: Biogen Idec press release