Irish Pharmaceutical Company Elan to “Reinvent Itself”

A major restructuring of the Tysabri collaboration between Elan Corporation (Elan; Dublin, Ireland) and Biogen Idec (Weston, MA, USA) will release Elan from reliance on one single asset and allow diversification to other fields.

Under the terms of the agreement, Elan will withdraw from the current equal-share collaboration, leaving Biogen Idec with full ownership of the blockbuster multiple sclerosis (MS) treatment Tysabri, and receiving in return an upfront payment of USD 3.25 billion and a double digit tiered royalty structure on future sales. While the agreement gives Elan strategic flexibility to buy new assets and expand to other fields, it leaves its future performance unclear, since Tysabri was by far its most important product, responsible for almost all its revenue.

For Biogen, the deal improves its standing in the MS arena, as it hopes to win approval for BG-12, a new drug to treat the debilitating neurological disease it expects to become a leading treatment for MS after its planned second-quarter 2013 introduction. Biogen will then be able to offer BG-12 alongside Tysabri and another MS treatment called Avonex, both of which are given by intravenous (IV injection), thus providing a range of treatment options for patients. Rival providers of MS treatments include Novartis, Teva Pharmaceuticals (Petach Tikva, Israel), Merck KGaA, and Bayer.

“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 multitiered royalty structure of the complete asset,” said Kelly Martin, CEO of Elan. “Our motivation was to diversify and de-risk the company to move forward; and for the patients to continue to benefit from the profound efficacy of Tysabri. The risk of one asset and a single collaborator was not ideal.”

“The restructuring of this business collaboration provides Elan with significant strategic flexibility. Future actions will be guided by our consistent and multiyear approach of dynamic risk/reward assessment of business opportunities,” added Mr. Martin. “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.”

Tysabri (natalizumab) is a humanized monoclonal antibody against the cell adhesion molecule α4-integrin, used in the treatment of MS and Crohn's disease. It is administered by IV infusion every 28 days. The drug is believed to work by reducing the ability of inflammatory immune cells to attach to and pass through the cell layers lining the intestines and blood–brain barrier (BBB). It has proven effective in treating the symptoms of both diseases, preventing relapse, vision loss, and cognitive decline, as well as significantly improving quality of life in people and increasing rates of remission and preventing relapse in Crohn's disease.

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