Elan rises despite worsening of deal price

SHARES IN Elan moved higher yesterday despite the news that the company will receive $115 million (€78.3 million) less than expected from Johnson & Johnson for its minority stake in the Irish biotech group.

It closed almost 4 per cent higher in Dublin yesterday and was trading over 2 per cent ahead on $7.75 at lunchtime in the US.

Fears that the worsening of the terms of the deal, which will now see Johnson & Johnson (J&J) pay $885 million rather than the previously agreed $1 billion, would hit the share price failed to materialise yesterday.

Analysts attributed the share price advance to relief at the end of uncertainty since it emerged in July that the terms of the alliance between Elan and J&J might breach a key element of Elan’s agreement with Biogen Idec, its partner in the key Tysabri multiple sclerosis drug programme. A US judge ruled earlier this month that Elan was permitting J&J to acquire Biogen’s part of the joint venture in the event of a change of control at the US group – contrary to the provisions of its agreements with Biogen. He gave the company 23 days to remedy the breach.

Ian Hunter, an analyst at Goodbody, said investors may draw comfort from the fact that there would be no further dilution of Elan’s stake in the Alzheimer’s immunotherapy programme, which Elan is conducting in partnership with Wyeth. J&J will commit up to an additional $500 million to the programme, where it now controls the Elan share.

Separately, Biogen told the Morgan Stanley healthcare conference it would be premature to conclude that the risk of developing a potentially deadly brain infection increases as patients take Tysabri for longer periods.

The comments came as two new reports emerged of patients in Europe who developed progressive multifocal leukoencephalopathy.