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Biogen Idec has agreed to acquire full Tysabri rights from Elan, and will use its existing cash reserves to make a payment of $3.25 billion to Elan upon the closing of the transaction and make future contingent payments to Elan.
Biogen Idec, a biotechnology company, has agreed to purchase the neuroscience-focused biotechnology company Elan’s interest in Tysabri (natalizumab), a monotherapy for relapsing forms of multiple sclerosis, and upon closing will gain full strategic, commercial, and decision-making rights to Tysabri. Upon the closing of the transaction, the previous collaboration agreement between the companies, whereby worldwide Tysabri profits were split 50/50, will be terminated along with the agreement’s change-of-control provisions.
Under the terms of the agreement, Biogen Idec will use its existing cash reserves to make a payment of $3.25 billion to Elan upon the closing of the transaction and make future contingent payments to Elan in an amount equal to 12% of global net sales of Tysabri for the first 12 months, and thereafter, Biogen Idec will continue to make contingent payments of 18% on annual global net sales of Tysabri up to $2.0 billion and 25% on annual global net sales that exceed $2.0 billion. In 2014 only, the $2.0-billion threshold will be pro-rated for the portion of 2014 remaining after the first 12 months expires.
Biogen Idec anticipates the transaction will be approximately $0.20–0.30 accretive to 2013 GAAP earnings per share and $0.50–0.60 accretive to non-GAAP earnings per share, and will continue to be accretive thereafter, depending on the sales trajectory of Tysabri.
“This is a natural next step for Biogen Idec and Tysabri, and it underscores our deep, long-term commitment to improving the lives of MS patients around the world,” said George A. Scangos, CEO of Biogen Idec, in a Feb. 6, 2013, press release. “Tysabri is a remarkably efficacious drug, and with the increased awareness of our risk stratification capabilities, we believe MS patients’ use of TYSABRI will continue to expand over the long-term. Full ownership will improve our ability to navigate its role as part of our leadership in MS. We appreciate Elan’s tremendous partnership and the productive approach to our discussions that led to a transaction that benefits the shareholders of both companies. We expect a smooth transition to the closing of the transaction.”