J&J wants $100M-plus discount on Elan

It's back to the drawing board for Johnson & Johnson and Elan. In the wake of a judge's ruling in favor of Elan's Tysabri partner Biogen Idec, J&J is lobbying for a lower price for their $1.5 billion deal, Reuters reports. That $1.5 billion was to buy J&J an 18.4 percent stake in Elan, a majority position in Elan's pipeline of Alzheimer's drugs and--here's the sticking point--an option to finance a buyout of Biogen's Tysabri share if the opportunity arose.

Biogen and Elan's partnership deal has a change-in-control provision: If one of the companies is sold, the other can buy its share of Tysabri. But Elan isn't exactly flush with cash, and so it gave J&J the option to finance that purchase. If J&J were to cough up the money, it would get a 50 percent share of the multiple sclerosis drug. But earlier this month a judge ruled that the financing option breached Elan's partnership deal with Biogen. So, Elan and J&J have to come up with a different plan, or risk losing that half-stake in Tysabri.

According to the Wall Street Journal, J&J wants to cut the price accordingly--by at least $100 million off that $1 billion minority-stake purchase. (The $500 million price for the Alzheimer's alliance wouldn't change.) That could be a problem for Elan; as In Vivo notes, the company had intended to pay down long-term debt with the deal proceeds. Elan had $1.8 billion in debt at the end of the second quarter.

- read the WSJ news
- see the coverage from Reuters
- check out In Vivo's take