Biogen to Pay Elan $3.25 Billion for Full Tysabri Rights Biogen Idec Inc. - facebook prikbord

Biogen to Pay Elan $3.25 Billion for Full Tysabri Rights Biogen Idec Inc. agreed to acquire partner Elan Corp.’s stake in the multiple sclerosis drug Tysabri for $3.25 billion in cash plus future royalties.

The deal gives Biogen all rights to the product, and the company will pay royalties to Elan, Dublin-based Elan said in a statement today. The companies had been splitting profit equally on the medicine, which generated $1.6 billion in sales in 2012.

The deal ends speculation that Biogen would buy Elan and transforms the Irish company into an investment vehicle in search of assets to buy in health care. Elan’s experimental drug for Alzheimer’s disease failed in late-stage trials last year, leaving Tysabri as the company’s single major product.

“This move gives us a chance to reinvest a fair amount of capital across a whole host of assets and helps us redefine and reposition the whole company,” Elan Chief Executive Officer Kelly Martin said in an interview. The company seeks a “balanced portfolio of assets” that would include products already on the market and experimental medicines, he said.

Elan rose 5.6 percent to 8.15 euros at 8:10 a.m. in Dublin. The stock has fallen 26 percent in the past year through yesterday. Biogen rose 1.1 percent yesterday to close at $157.36 in New York. The shares have gained 29 percent in the 12 months through yesterday.

Royalty Payments
Under the terms of the deal, Weston, Massachusetts-based Biogen will pay Elan 12 percent of global net sales of Tysabri for the first year; 18 percent on annual sales of as much as $2 billion and 25 percent on sales of more than $2 billion. Elan has said Tysabri sales may reach $2.5 billion to $3 billion by 2016, Eric Schmidt, an analyst with Cowen & Co., wrote in a research note. He estimated $1.9 billion by 2017.

Tysabri was left as Elan’s single major product after the experimental Alzheimer’s drug bapineuzumab failed to improve cognitive or functional ability in patients in late-stage studies. In December, Elan spun off its drug discovery unit into a company called Prothena Corp. Elan sold its Elan Drug Technologies unit to Alkermes Plc in 2011. Elan’s future actions will be guided by the company’s “assessment of business opportunities,” Martin said in the statement. “We are enthusiastic about the market opportunities around the globe and remain flexible and creative about the manner in which we would participate in those opportunities.”