Elan Breached Tysabri Partnership With Biogen Idec, Federal Judge Says

9/4/09Follow @xconomy

Irish drugmaker Elan breached its multiple sclerosis drug partnership with Biogen Idec when it tried to cut a separate deal to collaborate with Johnson & Johnson, according to a federal judge.

Elan, which made the announcement last night, said it respects the decision of the U.S. District Court for the Southern District of New York. Elan didn’t say whether it plans to appeal the judge’s decision, although it said it is still committed to working with J&J to close that deal in a way that’s consistent with its partnership with Cambridge, MA-based Biogen Idec (NASDAQ: BIIB), which has operations in San Diego.

The heart of the dispute is about who owns and controls the most effective multiple sclerosis drug on the market, natalizumab (Tysabri), co-marketed by Elan and Biogen. Elan’s proposed agreement with J&J would have given J&J an option to acquire Biogen’s 50 percent stake in the multiple sclerosis treatment if some other company acquires Biogen. Since a takeover at Biogen is what billionaire investor Carl Icahn has been pushing for over the past two years, and he now has gained two seats on the company’s board, the odds of this happening have to look a little better now than when Elan and Biogen struck their original partnership. The stakes are high, as Biogen’s rights to Tysabri would factor into any buyout discussions, and Tysabri is Biogen’s fastest-growing product, generating $588.6 million in revenue a year ago.

Jennifer Neiman, a spokeswoman for Biogen Idec, said Biogen would have the right to end the partnership with Elan if Elan doesn’t change its deal with J&J, according to a report by the Associated Press. Elan didn’t immediately return the AP’s calls seeking comment.

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