Alkermes to merge with Elan Drug Technologies
To create CNS therapeutics specialist Alkermes plc
US biotech Alkermes Inc is to buy Elan Drug Technologies (EDT), Elan Corporation’s drug formulation and manufacturing unit, in a deal worth an estimated US$960m.
The two companies will be combined under a new holding company incorporated in Ireland to be called Alkermes plc.
Under the terms of the deal, Elan will receive $500m in cash and 31.9 million ordinary shares of Alkermes plc common stock while existing Alkermes shareholders will receive one ordinary share of the new company in exchange for each in Alkermes.
The combined company is expected to have revenues of approximately $450m a year and adjusted EBITDA of around $80m.
Approximately $20m of annual synergies in US operations have been identified and are expected to be fully realised by 2013.
The transaction accelerates Alkermes’ aim of building a profitable biopharmaceutical company with expertise in developing treatments for central nervous system (CNS) diseases and a broad, diversified portfolio of products.
The new company will have diverse revenue streams from 25 products, with growth expected to be driven by five major products: Risperdal Consta, Invega Sustenna, Vivitrol, Ampyra and Bydureon.
The boards of both companies have approved the deal.
‘This merger will bring the scale and resources for strategic and balanced investment across the whole product continuum, from r&d innovation to clinical development, to world-class manufacturing and commercial expansion,’ said Richard Pops, chief executive of Alkermes.
Kelly Martin, chief executive of Elan said the transaction ‘aggressively advances a number of long-standing strategic and financial objectives for Elan.
‘Namely, it enables us to reduce the debt on our balance sheet and further improve our capital structure, increases operating leverage, allows for additional focus and continued disciplined investment in a broad array of opportunities within the neurology space from a scientific, clinical and product point of view and lastly, provides Elan shareholders with the opportunity to realise further value – over time – from the equity position in Alkermes plc,’ he said.
Pops will become chairman and chief executive of the new company, with Cooke as president.
The transaction is expected to close during the third quarter.