Elan Corporation plc
) recently closed its Tysabri (natalizumab) collaboration
). As a result, Biogen gained full strategic, commercial and
operational control over the multiple sclerosis drug.
The transaction was initially announced in Feb 2013. As per
the terms of the transaction Biogen made an upfront payment of
$3.25 billion to Elan. Elan stated that it will invest a portion
of the amount in different business assets. The company intends
to refinance its outstanding debt through a share repurchase
program by utilizing $1 billion of the upfront proceeds.
Elan is also eligible to receive a royalty payment of 12% on
worldwide net sales of Tysabri (for all indications) for the
first year. After the first year, Elan will receive a royalty of
18% on up to $2 billion of global net sales of Tysabri and 25%
thereafter. Tysabri sales came in at $1.6 billion in 2012.
We note that last month encouraging data was announced on
Tysabri. Data showed that Tysabri treatment resulted in lower
rate of first relapse compared to other multiple sclerosis
We believe that the loss of Tysabri is huge setback at to
Elan, since the product was its primary source of revenue. We
expect Elan to actively pursue in-licensing deals or acquisitions
to boost its product portfolio.
Elan, a biotechnology company, currently carries a Zacks Rank
#5 (Strong Sell). Currently, well-placed biotech stocks include
). Both the stocks carry a Zacks Rank #1 (Strong Buy). Biogen
also carries a Zacks Rank #1 (Strong Buy).
BIOGEN IDEC INC (BIIB): Free Stock Analysis
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