IHS Global Insight Perspective | |
Significance | J&J is to acquire an 18.4% stake in Elan and key AD pipeline programme with a price tag of US$1.5 billion. |
Implications | Bapineuzumab, the focus of this high-profile acquisition, is expected to hugely boost J&J's neurological portfolio, which faces increasing generics competition for blockbusters like Risperdal and Topamax. |
Outlook | The most intriguing part of the deal lies in the involvement of Wyeth in the AIP programme as it is to be acquired by Pfizer. Pfizer and J&J may therefore enter a negotiation for bapineuzumab's commercialisation strategies. |
U.S. healthcare giant Johnson &Johnson (J&J) announced that it is to acquire an 18.4% stake of Irish biotech Elan with an investment of US$1 billion through a newly formed subsidiary. The new company will acquire all the assets and rights of Elan's Alzheimer's Immunotherapy Programme (AIP programme) with the commitment of the initial investment to the AIP programme of up to US$500 million. Elan will have 49.9% of the shares in the newly formed J&J company. It will also be entitled to the same share of potential profits and certain royalties upon the commercialisation of products under the AIP programme. Based on the two companies' agreement, J&J won't buy more of Elan's shares for five years.
The main focus of the AIP programme, which is under the collaboration of Elan and U.S. drug major Wyeth, is a potential first-in-class AD treatment, bapineuzumab, which is currently undergoing Phase III studies for an intravenously administered formulation and Phase II trials for a subcutaneous formulation. The AIP programme also includes ACC-001, a vaccine candidate for the treatment of AD.
According to the two companies, the deal is expected to close in the second half of this year.
J&J to Enrich its Neuroscience Pipeline with Elan's AIP Programme
In early June, J&J stressed its R&D strategy in five therapeutic areas including neuroscience, where the company is aiming to strengthen its leading position. By taking the well-acclaimed pipeline hopeful bapineuzumab into its stable, J&J is to give its neuroscience pipeline a major boost to supplement its "pipeline-in-a-product" indication extension and to be a successor of its core products in this field, such as blockbusters Topamax, Risperdal and Concerta.
J&J's Main Neuroscience Products | ||
Drug Name | Active Ingredient | Indication |
Risperdal/Risperdal Consta | risperidone | Schizophrenia |
Axert | almotriptan | Migraine |
Concerta | methylphenidate | ADHD |
Duragesic | fentanyl | Pain management |
Invega | paliperidone | Schizophrenia |
Reminyl/Razadyne | galantamine | AD |
Topamax | topiramate | Anti-epilepsy |
Outlook and Implications
The freshly announced deal with Elan is J&J's strategic move to invest in its growth potential in neuroscience treatments. In 2008, J&J's financial performance was disappointing and its outlook for this year is not much brighter. In addition to the impact of global recession, the company is facing a common challenge with its Big Pharma peers, i.e. the increasing competition of generics for their off-patent top performers. For J&J, the neurological portfolio only has already seen the patent expiry of Risperdal and is facing the imminent end of patent protection for Topamax. The bagging of bapineuzumab is likely to boost the company's confidence in maintaining its strength in this area. Nevertheless, the deal's price tag will also be reflected in the company's ensuing quarters' results.
For Elan, this has come as upbeat news as its CFO Shane Cooke announced that the income will help the company reduce its debt by over 70% from US$1.4 billion to some US$400 million.
The potential gains of J&J and Elan aside, Elan's previously signed collaboration deal with Wyeth in the AIP programme will make this latest transaction interesting and intriguing, especially given that Wyeth is to be acquired by Pfizer. Talking about whether or not Wyeth will have a chance to object to Elan's transaction with J&J, Bob Purcell, Elan's Director of Corporate Relations told IHS Global Insight that there are no restrictions from the Elan-Wyeth partnership agreements that prevent the transfer of Elan's interest in the AIP programme. However, Wyeth may need to weigh its interest in the drug candidate based on its joint AD pipeline with Pfizer. Still, there are more complicated situations yet to come upon bapineuzumab's commercialisation. It is not unlikely that Pfizer and J&J, instead of the previously expected parties Elan and Wyeth, will sit down to negotiate bapineuzumab's commercialisation strategies including the allocation of marketing territories between the two giants.
With all this said, the transaction is still conditional on clearance under the Hart-Scott-Rodino Antitrust Improvements Act and other customary closing conditions.
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- Ireland: 1 June 2009: BMS Eyes Elan Acquisition
- Denmark: 14 May 2009: Lundbeck Says Timing Not Right for Potential Elan Acquisition
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