Johnson & Johnson is to acquire the rights to Elan’s Alzheimer therapy programme in a $1.5 billion investment announced today.
In a statement, the companies said they had reached a “definitive agreement” whereby Johnson & Johnson will acquire “substantially all of the assets and rights of Elan related to its Alzheimer’s Immunotherapy Program (AIP Program), through a newly formed company”.
In addition, Johnson & Johnson, through its affiliate, will invest $1 billion in Elan in exchange for newly issued American Depositary Receipts (ADRs) of Elan, which will represent 18.4 per cent of Elan’s outstanding ordinary shares.
The AIP Program represents Elan’s interest in a collaboration with Wyeth to research, develop and commercialise selective products for the treatment and/or prevention of neurodegenerative conditions, including Alzheimer’s disease.
Through its affiliate, Johnson & Johnson will take over and continue Elan’s activities with Wyeth under the AIP programme. It will initially commit up to $500 million to continue the development of bapineuzumab, a potential treatment that is being evaluated for slowing the progression of Alzheimer’s disease.
Elan will receive a 49.9 per cent equity interest in the newly formed Johnson & Johnson company that will acquire the AIP program. It will be entitled to a 49.9 per cent share of the profits and certain royalty payments upon the commercialisation of products under the collaboration with Wyeth.
Elan will be entitled to a 49.9 per cent share of the profits and certain royalty payments upon the commercialisation of products under the collaboration with Wyeth.
“Alzheimer’s disease is a significant unmet need in aging populations globally,” said Sheri McCoy, worldwide chairman, pharmaceuticals, at Johnson & Johnson.
“Johnson & Johnson’s development capabilities, commercial experience and global reach will provide the foundation to accelerate the AIP programme development, and increase its potential availability for patients globally.”
Elan chief executive Kelly Martin said the transaction would “leverage Elan’s unique scientific and clinical work and leadership in bringing treatments to market that potentially slow the progression of Alzheimer’s disease”.
“The Elan commitment to scientific innovation and patients remains absolute and we will continue to build upon and expand our leadership in the fields of neuroscience and immunology.”
As many as 5.3 million people are living with Alzheimer's disease in the US alone, Elan said.
It said the estimated direct and indirect cost of this each year to the government was more than $148 billion.
Elan's executive vice president and chief scientific officer Dale Schenk said: "After 20 years of following the science and advancing this technology into the latest stages of clinical development, it is our responsibility to ensure that this therapy, upon further clinical and regulatory progress, may be made available to the broadest range of patients globally. The capabilities of Johnson & Johnson will help in achieving that goal.”
The deal will have an estimated dilutive impact of $0.02 to $0.03 on Johnson & Johnson's 2009 adjusted earnings per share. The companies said they anticipated concluding the agreement in the second half of 2009.
The boards of directors of both Johnson & Johnson and Elan have each approved the transaction, which represents the culmination of an in-depth strategic review by Elan.
It is subject to anti-trust clearance.