Elan has sold the US rights of two of its prescription drugs for $850 million to US drug company King Pharmaceuticals. Elan's battered share price immediately responded to the news rising almost 18 per cent in Dublin this afternoon.
The deal with King also includes the transfer of more than 400 sales representatives as part of Elan's plan to shed its less lucrative medicines.
King said it acquired US and Puerto Rican rights to Sonata, a sleeping pill, and Skelaxin, a muscle relaxant, as part of the deal, which should close by the end of April.
King said the transaction would immediately add to its earnings when it closes but did not specify the estimated amount of the increase.
Under the deal, Elan will continue to develop new formulations of Sonata, including an extended-release version of the insomnia drug.
Analysts welcomed the deal and other details from Elan onprogress with its recovery plan, begun late last year."They've got a good price," said analyst Mr Ian Hunter atGoodbody Stockbrokers in Dublin.
Mr Hunter noted that Elan had hit its disposal target to raise$1.5 billion ahead of schedule, with more than $600 millionrealised from other sales in recent months.
Sonata and Skelaxin generated combined sales of about $238 million in the United States and Puerto Rico last year, King said.
Elan said it also settled a dispute with Pharma Marketingover rights to Sonata and panikiller Prialt. Elan will payPharma Marketing $225 million for the full rights to those drugs, less royalty payments due to Pharma Marketing.
In addition, Elan will have an option to purchase the royalty rights to three other drugs from Pharma Marketing until January 3rd, 2005.