Breach of contract with Biogen Idec related to Tysabri forced Elan to eliminate certain financing terms.!--h2>
Elan’s negotiations with Johnson & Johnson (J&J) to amend their July agreement so as not to violate its long-standing deal with Biogen Idec have resulted in a 7.6% decrease in the overall value of their arrangement.
Elan has entirely eliminated the strategic financing and collaboration agreement with J&J. Thus J&J will now invest $885 million in Elan instead of $1 billion as per the original deal covering Elan’s Alzheimer's immunotherapy program. The investment will be made in exchange for newly issued American depositary receipts representing 18.4% of Elan's outstanding ordinary shares, the same percentage as in the original deal. The remaining terms of the deal remain intact.
Earlier this month the United States District Court for the Southern District of New York ruled that Elan breached its collaboration agreement with Biogen Idec when it formed an alliance with J&J. The deal with Biogen Idec was inked in 2000 and covers the development and marketing of Tysabri, a multiple sclerosis drug. It stated that if either Biogen Idec or Elan were to be bought by a third party, the remaining partner had the right to take over full rights to Tysabri. After inking the deal with J&J, however, Elan said that JnJ may finance such an offer if Biogen were sold, which eventually raised Biogen Idec’s hackles.
Elan says that it would like to close the deal as promptly as possible. J&J will acquire most of the business, assets, and rights for Elan’s Alzheimer's immunotherapy program through the newly formed Janssen Alzheimer Immunotherapy. As per the original terms of the deal, J&J will commit up to $500 million to advance bapineuzumab, the lead compound, which is in Phase II trials as a subcutaneous formulation and III development as an intravenous drug. In consideration of the transfer of these rights and assets, Elan will still receive a 49.9% equity interest in Janssen Alzheimer Immunotherapy.