Report: J & J Wants to Reduce Value of Elan Deal
Mon, 09/14/2009 - 5:17am
NEW YORK (AP) — Media reports on Monday said Johnson & Johnson is trying to reduce its investment in Elan Corp. PLC by at least $100 million after Elan was found to be in violation of the terms of a previous partnership. Johnson & Johnson wants to cut the value of the deal, originally worth as much as $1.5 billion, after a judge ruled that part of its agreement with Elan violated Elan's decade-old partnership with Biogen Idec Inc., according to the Wall Street Journal. Johnson & Johnson had agreed to invest as much as $1.5 billion in Elan as the companies collaborated on drugs for Alzheimer's disease. Elan works with Biogen Idec to market the drug Tysabri for multiple sclerosis and Crohn's disease. The pact between Elan and Johnson & Johnson allowed J&J to make an offer for Biogen Idec's share of Tysabri if Biogen was ever taken over by another company. Biogen Idec said that was a violation of its agreement with Elan. Earlier this month, a federal judge sided with Biogen. Elan could lose all rights to Tysabri if it does not alter its deal with Johnson & Johnson. Johnson & Johnson had agreed to buy $1 billion in newly issued Elan stock, and to invest as much as $500 million in the development of the Irish company's prospective Alzheimer's treatment bapineuzumab. The Journal reported Johnson & Johnson wants to make a lesser payment for the Elan shares. Elan and New Brunswick, N.J.-based Johnson & Johnson did not immediately return calls seeking comment. Shares of Elan slid 26 cents, or 3.4 percent, to $7.35 in premarket activity.