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Johnson & Johnson is to take over most of Elan's Alzheimer's research and invest $1 billion in new Elan equity in exchange for an 18.4 percent stake in the Irish drugmaker, the companies said on Thursday.
The deal marks the end of a strategic review by Elan [ELN
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] and its adviser, Citigroup, following pressure from investors for change at the group, which has been burning through cash at a rapid rate.
J&J [JNJ
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] will initially commit up to $500 million to develop and commercialise bapineuzumab, Elan's experimental Alzheimer's treatment, and will continue Elan's existing activities with Wyeth [WYE
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] under their Alzheimer's immunotherapy program.
Wyeth is in the process of being acquired by Pfizer [PFE
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].
In exchange, Elan will get a 49.9 percent equity interest in a newly formed J&J company that will acquire the Alzheimer's programme.
The programme includes several experimental compounds, of which the most advanced is bapineuzumab, which is viewed by analysts as a risky but potentially lucrative product.
Researchers said last summer that a Phase II trial showed it helped some patients with a certain genetic profile, but raised the risk of potentially serious side effects in the brain.
J&J said the transaction would dilute its adjusted earnings in 2009 by between 2 and 3 cents a share. Shares in Elan leapt 30 percent in Dublin.
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