Elan enters $1B royalty deal with Theravance

May 13, 2013 by The Associated Press

Irish drugmaker Elan Corp. PLC plans to pay $1 billion for the right to future royalties from four respiratory treatments being developed by Theravance Inc. and GlaxoSmithKline.

The deal announced Monday will give Elan 21 percent of the future royalties that South San Francisco, California-based Theravance receives from Glaxo, a British drugmaker.

Theravance shares climbed $5.62, or 16.1 percent, to $40.56 in afternoon trading. Earlier the stock reached an all-time high of $40.70.

Drugs named in the deal include Breo Ellipta, a once-a-day inhaled treatment that just received approval from the U.S. Food and Drug Administration, and two treatments that have entered late-stage testing. The treatments also include Anoro Ellipta, for which the drugmakers have filed for regulatory approval in both the United States and Europe.

On Friday, the U.S. Food and Drug Administration said it approved Breo Ellipta for long-term use and to control flare-ups in patients with chronic obstructive pulmonary disorder, often called smoker's cough. The drug will be named Relvar Ellipta in Europe, where regulators are still reviewing it.

The companies expect to close the royalty agreement at the end of June if Elan shareholders approve it. Elan plans to use 20 percent of the sales it receives from this agreement to pay shareholders a cash dividend.

Elan has recently received takeover bids from Royalty Pharma, a private, New York-based company that buys royalty interests in drugs and late-stage drug candidates.

Royalty offered in February to buy Elan for $11 per share, or about $6.5 billion. It later raised that offer to $11.25 per share, or about $6.7 billion. Last month, Elan said its board unanimously rejected the takeover bid, with company leaders saying the price was too low.

U.S.-traded shares of Elan lost 24 cents, or 2.1 percent, to $11.54.

Moody's Investors Service said Monday that it is placing Elan's credit ratings on review for a possible downgrade. Moody's said Elan has spent a lot of cash recently without getting back anything that will generate immediate earnings or cash flow. The firm currently rates Elan's credit at 'Ba3'. That rating is non-investment grade, three notches into "junk" status.

"Although Breo Elipta could become a blockbuster, its rate of market acceptance is not certain and substantial returns to Elan could be protracted," said analyst Michael Levesque.

Explore further: US panel backs inhaler drug for lung disease

Related Stories

US panel backs inhaler drug for lung disease

April 17, 2013
A panel of U.S. respiratory experts voted Wednesday in favor of approving an experimental inhaler drug from GlaxoSmithKline and Theravance for treating chronic lung disease.

FDA approves once-a-day inhaler from Glaxo

May 10, 2013
The Food and Drug Administration says it has approved a new once-a-day inhaler drug from GlaxoSmithKline for patients with chronic lung disease.

Royalty Pharma offers to buy Elan for about $6.5B (Update)

February 25, 2013
Royalty Pharma said Monday that it wants to buy Elan Corp. PLC for about $6.5 billion, but has yet to receive a formal response from the Irish drugmaker.

Elan moves to deter takeover bid

March 4, 2013
(AP)—Irish drug maker Elan Corp. announced Monday it will pay shareholders a recurring special dividend linked to the sales of the multiple sclerosis treatment Tysabri.

Drugmaker GSK posts slumping Q1 profits

April 24, 2013
British drugs firm GlaxoSmithKline on Wednesday said its first-quarter net profit tumbled by almost a third, with the group hit by falling sales and a poor economic climate.

GSK unveils expansion plans in India, Nigeria

November 26, 2012
British drugmaker GlaxoSmithKline said it intends to increase its holdings in its Indian and Nigerian divisions, as part of a long-term strategy to expand into emerging markets, in a statement on Monday.

Recommended for you

Fighting opioid addiction in primary care—new study shows it's possible

October 18, 2017
For many of the 2 million Americans addicted to opioids, getting good treatment and getting off prescription painkillers or heroin may seem like a far-off dream.

With no morphine, 25 million die in pain each year: report

October 13, 2017
Every year, some 25 million people—one in ten of them children—die in serious pain that could have been alleviated with morphine at just a few cents per dose, researchers said Friday.

Study finds few restrictions on Rx opioids through Medicare

October 9, 2017
Medicare plans place few restrictions on the coverage of prescription opioids, despite federal guidelines recommending such restrictions, a new Yale study finds. The research results highlight an untapped opportunity for ...

Nocebo effect: Does a drug's high price tag cause its own side effects?

October 5, 2017
Pricey drugs may make people more vulnerable to perceiving side effects, a new study suggests—and the phenomenon is not just "in their heads."

Pre-packaged brand version of compounded medication to prevent preterm births costs 5,000 percent more

October 2, 2017
Preventing a preterm birth could cost as little as $200 or as much as $20,000, depending on which one of two medications a doctor orders, according to a new analysis from Harvard Medical School.

Cancer drugs' high prices not justified by cost of development, study contends

September 12, 2017
(HealthDay)— Excusing the sky-high price tags of many new cancer treatments, pharmaceutical companies often blame high research and development (R&D) costs.

0 comments

Please sign in to add a comment. Registration is free, and takes less than a minute. Read more

Click here to reset your password.
Sign in to get notified via email when new comments are made.