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Johnson & Johnson and Elan Corporation plc merger- Announce Definitive Agreement for Alzheimer’s Immunotherapy Program

By Amarendra Bhushan for CEOWORLD Magazine Updated:July 3, 2009

Johnson & Johnson, the health care giant, has bought an 18.4 percent stake in Irish biotechnology company Elan for $1 billion in a deal that also gives J&J rights to four Alzheimer’s disease treatments still in clinical trials.

A definitive agreement whereby Johnson & Johnson will acquire substantially all of the assets and rights of Elan related to its Alzheimer’s Immunotherapy Program (AIP Program), through a newly formed company. In addition, Johnson & Johnson, through its affiliate, will invest $1 billion in Elan in exchange for newly issued American Depositary Receipts (ADRs) of Elan which will represent 18.4% of Elan’s outstanding ordinary shares.

The AIP Program represents Elan’s interest in a collaboration with Wyeth to research, develop and commercialize selective products for the treatment and/or prevention of neurodegenerative conditions, including Alzheimer’s disease.

Johnson & Johnson, through its affiliate, will assume and continue Elan’s activities with Wyeth under the AIP Program and will initially commit up to $500 million to continue the development and launch activities of bapineuzumab, a potential first-in-class treatment that is being evaluated for slowing the progression of Alzheimer’s disease, as well as other compounds. The agreement provides for additional funding obligations of the parties if needed.

In consideration for the transfer of these rights and assets, Elan will receive a 49.9% equity interest in the newly formed Johnson & Johnson company that will acquire the AIP Program. Elan will be entitled to a 49.9% share of the profits and certain royalty payments upon the commercialization of products under the collaboration with Wyeth.

The AIP Program includes multiple compounds being evaluated for slowing the progression of Alzheimer’s disease. The lead compound (bapineuzumab), administered intravenously once every three months, is currently in Phase 3 clinical trials. A subcutaneous formulation, administered once a week, is currently in Phase 2 trials. In addition, a vaccine for Alzheimer’s disease (ACC-001) is also under development.

In the U.S. alone, as many as 5.3 million people are living with Alzheimer’s disease. The direct and indirect costs of this and other dementias to payers, including government programs, amount to more than $148 billion annually, according to the Alzheimer’s Association.

“Alzheimer’s disease is a significant unmet need in aging populations globally,” said Sheri McCoy, Worldwide Chairman, Pharmaceuticals, Johnson & Johnson. “Johnson & Johnson’s development capabilities, commercial experience and global reach will provide the foundation to accelerate the AIP Program development, and increase its potential availability for patients globally.”

Elan Chief Executive Officer, Kelly Martin, believes that this transaction positively impacts Elan and patients globally. “This transaction will leverage Elan’s unique scientific and clinical work and leadership in bringing treatments to market that potentially slow the progression of Alzheimer’s disease. The Elan commitment to scientific innovation and patients remains absolute and we will continue to build upon and expand our leadership in the fields of neuroscience and immunology.”

Husseini Manji, M.D., Global Therapeutic Head, Neuroscience, Johnson & Johnson Pharmaceutical Research & Development, added: “This transaction will be a key component in achieving our vision to develop treatments that target underlying disease biology, thereby helping to prevent some of society’s most devastating illnesses. We expect to focus our resources on bringing the AIP Program to fruition as quickly as possible because of its potential to slow the progression of Alzheimer’s disease.”

Dale Schenk, PhD, Executive Vice President and Chief Scientific Officer for Elan provided a perspective that “After twenty years of following the science and advancing this technology into the latest stages of clinical development, it is our responsibility to ensure that this therapy, upon further clinical and regulatory progress, may be made available to the broadest range of patients globally. The capabilities of Johnson & Johnson will help in achieving that goal.”

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