J&J is buying a $1 billion stake in Elan and creating a new firm seeded with $500 million to continue R&D.
Johnson & Johnson is acquiring substantially all Elan’s assets and rights related to the Alzheimer’s immunotherapy program (AIP program) through a newly formed company. JnJ will invest $1 billion in Elan in exchange for newly issued American depositary receipts of Elan, representing 18.4% of Elan’s outstanding ordinary shares.
The new JnJ entity will take over Elan’s responsibilities under its collaboration with Wyeth and will initially commit up to $500 million. Upon closing, the transaction will have an estimated dilutive impact of $0.02 to $0.03 on JnJ’s 2009 adjusted earnings per share.
In consideration for the transfer of these rights and assets, Elan will receive a 49.9% equity interest in the newly formed JnJ company. Elan will be entitled to a 49.9% share of the profits and certain royalties.
The AIP program represents Elan’s interest in a collaboration with Wyeth to research, develop, and commercialize selected products for the treatment and/or prevention of neurodegenerative conditions including Alzheimer’s disease.
The lead compound in the AIP program, bapineuzumab administered intravenously once every three months, is in Phase III clinical trials. A subcutaneous formulation, administered once a week is in Phase II studies. In addition, a vaccine for Alzheimer’s disease (ACC-001) is also under development.
