Elan and King disagreement over franchise

Elan Corporation has filed a lawsuit against King Pharmaceuticals and certain of its subsidiaries in the Supreme Court of the State of New York to compel King to complete its previously announced purchase of Elan's primary care franchise (principally consisting of Elan's U.S. and Puerto Rican right to Sonata (zaleplon) and Skelaxin (metaxalone)).

'King Pharmaceuticals has made a number of public statements that call into question its willingness to honour its obligation to complete the transaction in accordance with its agreement. Upon the receipt of Elan shareholder approval at the Extraordinary General Meeting to be held in Dublin on Tuesday, we strongly believe that all conditions required for the closing of the transaction will have been satisfied. Therefore, any refusal by King to close the transaction in accordance with its agreement has no basis and is unjustified' G. Kelly Martin, president and ceo of Elan said. 'The primary care transaction is a critical component of our recovery plan and this is a necessary step for the protection of our shareholders and our company,' Martin added.

King Pharmaceuticals, meanwhile, reports that the FTC investigation with respect to Elan's product, Skelaxin, does not relate to any anti-competitive practices by King with respect to its planned acquisition of the product. Rather, according to the letter King received from the FTC: 'The focus of this investigation is Elan's listing in the FDA's Approved Drug Products with Therapeutic Equivalence Evaluations (Orange Book) of at least one patent purportedly claiming a method of using metaxalone, and other actions with regard to FDA regulatory processes.'

The FTC has requested copies of any information King has with respect to this investigation.