Judge Deborah Batts works fast. In Manhattan federal court yesterday, Batts slapped down Elan's request for an injunction against Biogen Idec, ruling instead that Elan had breached the two companies' Tysabri partnership. The judge gave Elan till Sept. 26 to fix the problem or risk losing its half-share of the multiple sclerosis drug.
You all know the background: Elan gave Johnson & Johnson an option to finance a deal for Biogen's Tysabri share, if the chance arose because of a Biogen buyout. In the event, J&J would become Elan's 50-50 partner on the drug. Biogen cried foul, and Elan sued to stop its partner from cancelling the collaboration deal--and taking over Tysabri completely.
In court yesterday, Biogen's lawyer Michael Gruenglas argued that Elan effectively surrendered control of the purchase option to J&J. Elan "is no longer in the driver's seat; Johnson & Johnson is driving the car," Gruenglas told the judge (as quoted by Reuters). Batts didn't quite agree-- according to the Financial Times, she said the J&J deal didn't exactly assign rights away from Elan--but she did rule that Elan had granted J&J enough control to breach the collaboration agreement with Biogen.
Elan said in a statement that it respects the court's decision and is "committed to working with Johnson & Johnson" to close their deal quickly in a way that is "consistent with the Biogen-Elan Tysabri collaboration agreement." Its lawyer was a bit more direct: "We've got a $1.5 billion deal that's hanging," Charles Gilman of Cahill Gordon & Reindel told Bloomberg. If both the J&J deal and the Biogen partnership were to fall apart at the same time, "we would be toast," he said.
Interestingly, Gilman also blamed Carl Icahn for the upset. Icahn has been agitating for big changes at Biogen--either a sale or breakup of the company--and won a couple of board seats in a spring proxy fight. "In a nine-year collaboration, there has never been a notice of breach until Carl Icahn took an investment position in Biogen," Gilman told the judge. Icahn or no, the breach is there, and we'll have to wait and see how Elan moves to cure it.