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May 9, 2011

Elan Sells Drug Technologies Business to Alkermes for $960M in Cash and Shares

Elan Sells Drug Technologies Business to Alkermes for $960M in Cash and Shares

Merged entity will have scale and resources for investment in new products, Alkermes claims. [© Andy Dean - Fotolia.com]

  • Elan sold its Elan Drug Technologies (EDT) formulation and manufacturing business to Alkermes in a cash and shares deal valued at $960 million. Under terms of the agreement Elan shareholders will receive $500 million in cash and a 25% equity stake in the merged Alkermes entity, which will be incorporated in Ireland.

    The combined Alkermes will start life with 25 commercialized products, pro forma annual revenues of some $450 million, and a strong CNS-focused pipeline of in-house and partnered products in clinical development. Drug formulation capabilities will include EDT’s oral controlled-release technologies and NanoCrystal® platform for poorly water-soluble drug compounds, together with Alkermes’ long-acting injectable drug expertise. In March the European Commission approved Janssen-Cilag’s injectable schizophrenia therapy Xeplion®, marking the first approval of an injectable drug formulated using EDT's NanoCrystal® technology.

    Elan’s EDT business achieved revenues of $65.9 million in the first quarter of 2011. The firm says spinning out the operation will allow it to reduce debt and focus on progressing and building its CNS product pipeline. From Alkermes perspective, “this merger will bring the scale and resources for strategic and balanced investment across the whole product continuum, from R&D innovation to clinical development to world-class manufacturing and commercial expansion,” notes Richard Pops, Alkermes CSO. “The merger will be financially transformative and create a profitable, global biopharmaceutical company with a diversified CNS product portfolio and a strong foundation for growth.”

    Alkermes has two marketed drugs: Risperdal® Consta®, for the treatment of schizophrenia and bipolar disorder; and Vivirol®, for treating alcohol and opioid dependence. The type 2 diabetes therapy Bydureon™, which is being developed by Eli Lilly, Amylin Pharmaceuticals, and Alkermes is under regulatory review in the U.S. and Europe. Bydureon is an extended release once-weekly injectable formulation of Byetta® (exenatide). In April the European Medicines Agency’s CHMP recommended approval of the drug in combination with oral therapies.

    Alkermes’ clinical-stage pipeline includes Phase II stage candidates for treating opioid-induced constipation, schizophrenia, and reward disorders, potentially including alcohol dependence, binge eating disorder, cocaine addiction, and treatment-resistant depression. A preclinical pipeline includes candidates for treating pain, rheumatoid arthritis, and schizophrenia.

    Janssen markets Risperdal Consta worldwide. Sales of the drug reached $388 million in the third fiscal quarter of 2010 (to December 31). Sales of Risperdal Consta were responsible for the bulk of the $9.8 million in royalty revenues earned by Alkermes in that period. The firm also reported making $7.7 million from its own net sales of Vivitrol in the three months to December 31, 2010.  The majority of Alkereme’s total revenues are earned from manufacturing, and in Q3 2010 the firm reported manufacturing revenues of $26.2 million, including $25.5 million from the manufacture of Risperdal Consta for Janssen.

    Elan is focused on the development of treatments for neurodegenerative disorders and autoimmune disorders. Its pipeline includes candidates for Alzheimer disease and Parkinson disease, multiple sclerosis, and Crohn’s disease. The firm’s Biogen Idec-partnered drug Tysabri® (natalizumab) is approved in major markets for the treatment of multiple sclerosis, and in the U.S. for the treatment of Crohn’s disease.

    Elan markets Tysabri in the U.S., and shares profits from Biogen Idec’s sales of the drug in non-U.S. markets worldwide. Elan recorded net U.S. Tysabri sales of $169.9 million during first quarter of 2011, up 26% over net sales of $135.2 million in the same period of 2010. Global in-market net sales of the drug were $349.4 million for the first quarter of 2011, up 20% on equivalent 2010 figures. As a result, Elan recorded net revenue of $75.3 million from sales of Tysabri in rest of world markets during the first quarter of 2011, compared to revenues of $63.6 million in Q1 2010.


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