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Elan Recovery Slowed By King

 
• By Chris Morrison

King Pharmaceuticals' decision to abandon its $850 million purchase of Elan's primary care franchise is the first serious setback to the embattled Irish firm's recovery plan. But with several remaining saleable assets and a potential blockbuster in Phase III autoimmune therapy Antegren, all is not lost.

When Elan Corp. PLC announced in late January 2003 the sale of its primary care franchise to King Pharmaceuticals Inc. , the $850 million (€775 million) deal put the Irish group comfortably past its goal of raising $1.5 billion by the end of 2003 to avoid a looming debt crunch—with a few months to spare [See Deal]. Elan agreed to sell zaleplon (Sonata), an insomnia treatment, and the muscle relaxant metaxalone (Skelaxin) along with its 400-strong US primary care sales force for $650 million, and King agreed to assume Elan's product-related payments for Sonata. The terms also called for Elan to continue its development of enhanced formulations of the sleep-aid, for which it might earn up to $60 million in clinical and regulatory milestone payments from King.

Skelaxin and Sonata had been substantial revenue generators for Elan, selling $145 million and $93 million in 2002 respectively. But...

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