Elan cures breach; Johnson & Johnson drops price for interest in company

By Lisa Kerner

Charlotte, N.C., Sept. 14 - Elan Corp. plc's discussions with Johnson & Johnson remain "constructive," chief executive officer G. Kelly Martin said during a presentation Monday at the Morgan Stanley Global Healthcare Conference.

The company announced separately that it agreed to modify the terms of its pending transaction with Johnson & Johnson, specifically eliminating the strategic financing and collaboration agreement related to the drug Tysabri.

Johnson & Johnson agreed in July to acquire an 18.4% interest in Elan for $1 billion but has now cut the offer to $885 million. However Johnson & Johnson, a New Brunswick, N.J.-based health-care company, will still invest $500 million to acquire a large portion of Elan's portfolio of experimental Alzheimer's drugs, according to an Elan news release.

Elan said it cured an unintended breach of its Tysabri collaboration agreement with Biogen Idec Inc. that had been identified by the U.S. District Court for the Southern District of New York within the provided timeframe.

Martin said Tysabri, used for the treatment of multiple sclerosis, is a "fascinating therapy" and its usage grows each week.

"I think Tysabri is just a topic we are going to have to continue to spend time on," Martin said.

Partnerships possible

When asked during the conference about Elan Drug Technologies, Elan's drug-delivery company, Martin said it is "a great business" and cited its steady income and multiple partners.

"We view EDT as a growth business and one that has value," Martin said.

Martin spent some time discussing partnerships, although the company does have products coming forward in its pipeline that Martin said are "unencumbered."

"I think partnerships are fantastic, particularly in the research and discovery area," Martin said, but he added that they become more difficult in late-stage clinical and commercial operations.

Elan, a Dublin-based biotechnology company, has probably seen the last of its 50/50 partnerships and will instead opt to give a 51% vote on operations to one partner.

In January, Elan announced it would review strategic alternatives for the company with the assistance of Citigroup Global Markets Inc. Elan said at the time that alternatives could include a minority investment or strategic alliance, a merger or a sale.

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