DUBLIN, Ireland—Finding strength in numbers, Élan DrugTechnologies (EDT), the drug delivery business unit of neuroscience-focusedglobal firm Élan Corp., and Alkermes Inc., a biotechnology companyheadquartered in Waltham, Mass., have pooled their resources in the form of amerger. The cash-and-stock transaction, announced May 9, is valued atapproximately $960 million and is intended to create a profitable, globalbiopharmaceutical company with both a diversified central nervous system (CNS)product portfolio and a strong foundation for growth.
Although the companies acknowledge that they have neverworked together, combining their capabilities "is the right fit at the righttime, as both businesses are strong and positioned for growth organically andstrategically," says Cory Tromblee, a spokesman for EDT.
"Combining both companies' strengths in product developmentand commercialization will result in the creation of a global biopharmaceuticalcompany with a complementary CNS franchise, a diversified and strengthenedproduct and technology portfolio, broader development pipeline, enhancedR&D capabilities and an expanded manufacturing footprint in the U.S. andEurope," Tromblee says.
Specifically, EDT brings to the table 22 productsincorporating the unit's technologies that are currently marketed by EDT licensees.EDT receives royalties, and in some cases, manufacturing fees on theseproducts. In addition, EDT has 12 products in clinical development or underregulatory review, a number of which are for CNS indications, including pain.The furthest program in development is Meloxicam IV, a non-steroidal,anti-inflammatory drug candidate for pain that just completed Phase IIbclinical studies.
Adding to the mix, Alkermes brings diverse revenue streamsfrom 25 commercialized products, with future near-term growth expected to bedriven by five major products: Risperdal Consta, Invega Sustenna, Ampyra,Vivitrol and Bydureon.
Rebecca Peterson, vice president of corporate communicationsat Alkermes, calls the merger "transformative, one that brings us to a globalscale and catapulted us to a whole new level."
"This is a transaction involving two very like-mindedcompanies, a natural pairing," Peterson says. "The transaction provides therevenue stream to do two things: become profitable, while simultaneouslyinvesting in a pipeline we believe will drive strong future growth."
Alkermes, she says, "has always been financiallydisciplined and focused on the development end of the R&D spectrum, ratherthan spending resources on new biology."
"Our bread and butter has always been in the optimization ofdrug candidates to improve their therapeutic value," she says.
The areas that Alkermes "has the most chops in, in terms ofexpertise," says Peterson, are "schizophrenia, bipolar disorders, depressionand reward disorders, or addiction."
The latter, she explains, is a new andemerging field of research into treating opiate addiction, gambling, bingeeating and compulsive types of behavior driven by the CNS.
The newly created company, which will be named Alkermes PLC,will be headquartered in Dublin. Shane Cook, Élan's executive vice presidentand drug technology unit head, will be president of the new company. EDT willretain the 450 employees who currently work in Dublin, while the 600 peopleemployed at Alkermes will remain in place across the pond.
"Knowledge and experience of all employees—from both Alkermesand Élan Drug Technologies—are extraordinarily important to both businesses,and will remain so when the two are combined," Tromblee says. "As managementwork through the transaction, operational efficiencies will be examined, thoughmanagement will look to maintain key expertise within the two organizations. Overall,there is not a lot of overlap between the two organizations operationally, andin fact, they are largely complementary."
The boards of both companies have approved the terms of themerger, under which Élan will receive $500 million in cash and 31.9 millionordinary shares of Alkermes PLC common stock. The companies will also enterinto a shareholder agreement that contains a lockup, standstill and votingagreement for Élan's shares of Alkermes PLC. Alkermes' current shareholderswill receive one ordinary share of Alkermes PLC in exchange for each share theyowned at the time of the merger. Alkermes PLC shares will be registered in theUnited States and are expected to trade on the NASDAQ exchange.
Pending approval by Alkermes' stockholders as well ascustomary closing conditions and regulatory approvals, the merger is expectedto close during the third quarter. The combined company is expected to have growingproduct, royalty and manufacturing revenues in excess of $450 million annuallyand resources to invest in new drugs.
According to the companies, Alkermes PLCwill be able to achieve double-digit growth rates by 2013, when approximately$20 million of annual synergies in U.S. operations will have been identifiedand fully realized.
According to Tromblee, the transaction separates the EDT andBioNeurology business units of Élan in a manner that will be beneficial to Élan'sshareholders.
"The proceeds of the transaction will go toward positioning Élanon a stronger financial footing for the future," he notes. "Élan's focus willbe, assuming the transaction with Alkermes is completed, exclusively on theBioNeurology research programs including those in Alzheimer's disease,Parkinson's disease, multiple sclerosis and Crohn's disease."