Irish drugmaker Elan has agreed to sell the European marketing rights for its painkiller Prialt to Japanese pharmaceutical group Eisai for $100 million (€83 million) in cash, a move that pushed the group's shares up by more than 3 per cent.
Elan will retain the US rights to the drug, which is used for the treatment of chronic pain and is administered by intrathecal pump. It was launched in the US at the beginning of last year and had sales of $6.3 million in 2005.
Under the terms of the agreement, Elan will receive $50 million when the deal has closed and a further $10 million in two years' time or earlier if Prialt is launched in key European markets prior to early 2008.
The deal also includes a further $40 million payable to Elan, contingent on Prialt achieving revenue-related milestones in Europe.
Elan said it expects to record a gain of more than $40 million on closure of the transaction, which is due by the end of March subject to regulatory approval.
The deal, which comes a year after the drug received marketing approval from the European Commission, was welcomed by analysts, who said the upfront payment offered particularly good value for a product that has only sold $6.3 million in its first year in the US market.
One also said it was "strategically sensible" as Elan no longer had its own European structure.
Kelly Martin, Elan's chief executive, said the firm was delighted Prialt would now be made available throughout Europe.
"Prialt is a highly innovative, approved, intrathecal analgesic for patients suffering from severe chronic pain," he said. "Patient need in this area remains significant given that there have not been any meaningful therapeutic advances in this area for more than two decades."
Garo Armen, the former chairman of Elan, has raised $3.94 million (€3.3 million) by selling 250,000 shares in the pharmaceutical firm. Dr Armen, a non-executive director at Elan, sold the stake late last week at $15.7606 per share. He had previously exercised options over the same number of shares, for which he paid $3.84 per share, or a total of $960,000.
