Elan sceptical of Royalty
pharmafile | February 26, 2013 | News story | Sales and Marketing | Elan, FDA, Tysabri, royalty pharma
Elan Corporation has poured tepid water on private equity firm Royalty Pharma’s putative offer this week for the Irish biotech company.
In a statement, Elan’s board said the timing of Royalty’s proposal – which values Elan at $6.6 billion – is ‘highly opportunistic’.
Last week Elan announced it was restructuring its relationship with Biogen Idec, the company with which it markets multiple sclerosis (MS) treatment Tysabri.
It will cease to be a 50-50 business collaboration: instead Elan will make an upfront payment of $3.25 billion in return for double digit royalties on Tysabri for as long as the drug is in use.
It is currently approved in the US as monotherapy for relapsing forms of MS in patients who have had an inadequate response to, or are unable to tolerate, other treatments.
In Europe it is authorised for highly active relapsing-remitting MS (RRMS) in adults who have failed to respond to beta interferon or have rapidly evolving, severe RRMS.
Elan says that Royalty’s intervention has come before Elan’s shareholders “have had the opportunity to assess and realise the full benefit of the Tysabri transaction and the partial unlocking of its value”.
The new deal will allow Elan to use the cash it has freed up for more acquisitions, and the firm says it has been working for over a year on a number of strategic transactions that “would be to the benefit of our public shareholders” if they come off.
Royalty says its proposal to pay $11 per share “does not constitute an announcement of a firm intention to make an offer”, and Elan points out that Royalty’s indication of interest is ‘heavily conditional’.
“Any credible proposal which may be made by Royalty Pharma or any other party will of course be considered,” it adds.
For its part, Royalty says it has received no formal response to its proposal and “has been unsuccessful in its efforts to engage with Elan”.
The US firm also expressed surprise that Elan had not mentioned its proposal when revealing details last week of its plans following the Biogen agreement.
Royalty recently paid $761 million for an interest in Biogen’s Tecfidera (formerly BG-12) for the treatment of MS. Further announcements will be made ‘if and when appropriate’, Elan’s statement concluded.
In January Elan and Biogen applied to the FDA and EMA to expand Tysabri’s use in patients with relapsing forms of MS who have tested negative to the JC virus. This is the infection which causes progressive multifocal leukoencephalopathy (PML), a viral infection of the brain which usually leads to death or severe disability.
Tysabri increases the risk of PML, which is why the blockbuster was taken off the market after its launch in 2004.
However, close monitoring and further risk assessment in patients along with tests, allowed the drug to rejoin the market in 2006, helped also by its efficacy in treating MS after patients stopped responding to beta interferons.
If approved, the companies’ new applications could increase sales of the drug to almost $3 billion by 2015, according to analysts Berenburg.
Adam Hill
Related Content
Johnson & Johnson submits robotic surgical system for De Novo classification
Johnson & Johnson has announced the submission of its Ottava Robotic Surgical System for De …
MedPharm announces US FDA inspection of North Carolina manufacturing facility
MedPharm has announced that the US Food and Drug Administration (FDA) has completed a successful …
Rethinking oncology trial endpoints with generalised pairwise comparisons
For decades, oncology trials have been anchored to a familiar set of endpoints. Overall survival …
