It is final. After going over the Elan-Johnson & Johnson deal, a federal judge concluded that Elan violated its agreement with Biogen by allowing Johnson and Johnson the possible acquisition of all of Tysabri’s marketing rights as part of their deal. Elan and Johnson & Johnson now have about 4 weeks to reverse the Tysabri portion of their deal.
A deal made without partner consent
We covered this situation a couple weeks back, when Johnson and Johnson acquired 18.4% of Elan in a deal that included Elan’s Alzheimer’s pipeline and the rights to acquire all of Tysabri’s marketing rights in case Biogen was bought out by another company. Sensing that this would adversely affect its position in the market, Biogen accused Elan of violating its Tysabri agreement (since Elan had not discussed the JnJ deal with them before it was done) and asked for forfeiture of all of Tysabri rights under their previous agreement. The case went straight to federal court – Tysabri being the best-selling MS drug on the market meant Biogen could have lost a big winner, a drug that provided about half a billion dollars in revenue last year.
After a week of going over all the deal papers, Federal Judge Deborah Batts concluded that Elan indeed violated the agreement and would now have the remaining 23 days to settle its case with JnJ – basically reversing the Tysabri portion of the deal. This puts all the three companies back to old times, still owning their respective rights to Tysabri but having no financial power to take things forward. As Jim Edwards of BNET rightfully puts it:
” … while the Tysabri ruling was a “win” for Biogen, it merely moves Elan and Biogen back to Square One in the suicide-pact-cum-death-match that is now their Tysabri agreement. Neither party can get rid of the other without spending billions they don’t have; and neither party can take on partners without the other’s sign-off.”
Biogen looking to expand MS pipeline independence
That said, Biogen seems to have strong and better plans for expanding its market share and position. Just the day after the court ruling, Biogen proposed to takeover California-based Facet Biotech one if its partners in a new MS drug. Biogen plans to offer over US$350 million to acquire this company, a move that is in sharp contrast to the common notion that it is waiting to be acquired by someone else. Biogen already has the largest portfolio of MS drugs on the market, and this deal would make its position much stronger in the MS space.
Although Biogen has seen troubled times in the past they are a market player to watch out. With their main focus on developing treatments for neurological diseases, especially for Multiple Sclerosis, they could play a major role in shaping future market trends in this industry.
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