Following a judge's orders, Elan and Johnson & Johnson have amended their agreement to remove a breach of Elan's deal with Tysabri partner Biogen Idec. The Biogen/Elan deal allows either company to acquire full rights to the multiple sclerosis drug if the other company is acquired, but those rights cannot be transferred to a third party. A judge ruled that Elan's deal with J&J deal effectively did just that.
Under the new terms, Elan's share of the multiple sclerosis drug is no longer a part of the agreement. Which means J&J no longer has the right to finance Elan's purchase of Biogen's stake in the multiple sclerosis drug. In return, J&J will keep $115 million of the promised $1 billion in cash.
The other terms of the agreement remain intact: The drug giant will still get 18.4 percent of Elan's shares and a majority stake in Elan's Alzheimer's program. The majority of the cash infusion will be used to form Janssen Alzheimer Immunotherapy to develop the Alzheimer's portfolio. For it's part, Elan will get a 49.9 percent stake in the new company and is entitled to royalty payments on any commercialized products.
The changes will likely be accepted by the court, but Elan may face more problems with its shareholders, Reuters reports. The drugmaker did not reveal the details of its agreements on Tysabri with Johnson & Johnson before the deal was made. If that information is deemed to be more than just a side note to its investors, the drugmaker may find itself back in court.
- more from Reuters
- here's the WSJ piece