Elan is selling the North American marketing rights for its Frova migraine drug back to British biotech group Vernalis for $55 million (€45.3 million).
The pharmaceutical group said it would use the proceeds of the sale to prepare for the launch of two other drugs, Antegren, which is used in the treatment of multiple sclerosis and Crohn's disease, and Prialt, which treats pain.
Under the terms of the agreement, Vernalis will make an initial payment of $5 million to Elan on completion of the sale, which is expected before the end of the second quarter of 2004. This will be followed by payments of $20 million on December 31st, 2004 and $25 million a year later.
It will also purchase certain inventory from Elan at an expected cost of around $5 million which will be paid by the end of 2004. Elan's co-promotion agreement with UCB Pharma will be terminated, resulting in a cost to Elan of around $10 million.
Frova was launched in the second quarter of 2002 in the US, where it is marketed as a treatment for migraine. US sales of the drug totalled $37.5 million last year, with $13.7 million sold in the fourth quarter.
Analysts described the deal as "a tidying-up exercise" by Elan which would free up resources to allow it to focus on Antegren, a key drug in its pipeline.
Meanwhile, in a report on Elan and the Alzheimer's market, Goodbody Stockbrokers says that if successful, the company's Alzheimer's treatment has the potential to conservatively capture a 10 per cent share of a market that could be worth as much as $21 billion by 2020.
According to Goodbody analyst, Mr Ian Hunter, there are more than 13 million Alzheimer sufferers worldwide but this figure could reach 37 million by 2025 as the baby-boomer generation hits 65. "Within this environment, Elan's candidate drug, currently in Phase I clinical trials... has the potential to enter a buoyant market in 2009/2010, which could support a number of $1 billion plus drugs."
As a result, Goodbody has raised its price target for the stock from $17 to $23.50. In Dublin, Elan shares closed 10 cents lower at €16.40 last night while they gained 20 cents to $20.15 in New York.
