J&J to invest $1.5 billion in Elan's Alzheimer's drugs

Johnson & Johnson, world's largest healthcare company is set to invest $1.5 billion in Ireland's Elan Corporation plc for acquiring its assets related to the Alzheimer's Immunotherapy Programme (AIP), adding a late-stage high potential drug in its portfolio of medicines for neurological disorders.

A definitive agreement between the two sides has been signed yesterday under which J&J through its affiliate will take 18.3 per cent stake in Elan by investing $1 billion in its newly issued American Depository Receipts (ADR) at a price of $9.32 each, 33 per cent higher than the Wednesday's closing price.

Further, the J&J affiliate will initially commit $500 million to continue the development and launch of a potential first-in-class drug bapineuzumab for the treatment of Alzhemier's disease, as well as other compounds, the company said in a press release yesterday.

Elan has partnership with Wyeth for the AIP for research, development and commercialisation of selective products for the treatment of neurodegenerative conditions. Wyeth, a pharmaceutical major was acquired by Pfizer, world's biggest drug maker earlier this year and the deal is expected to close by the end of the year. (See: Pfizer-Wyeth create $68-billion blockbuster deal)

In lieu of the transfer of its rights and assets, Elan will receive a 49.9 per cent stake in the newly formed J&J affiliate, apart from sharing the profit and certain royalty payments from the drugs developed under the AIP.

The AIP includes multiple compounds being evaluated for slowing the progression of Alzheimer's disease. The main compound bapineuzumab which is given once every three months, is currently undergoing phase 3 clinical trials. Another formulation administered once a week and a vaccine are also under development.

The results of the mid stage study of bapineuzumab reported last year were somewhat disappointing as the drug appeared ineffective on certain patients who had a specific gene.