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Elan buys into GSK-partnered Theravance programmes for $1bn

Takes a royalty interest in four respiratory drugs

Drug discoveryIreland's Elan has used the proceeds from the sale of a number of its key assets to buy a royalty interest in four respiratory drugs developed by Theravance and GlaxoSmithKline.

Under the terms of the deal, Theravance will get the princely sum of $1bn upfront in return for granting Elan a 21 per cent royalty on the four chronic obstructive pulmonary disease (COPD) products, which include Breo (fluticasone furoate and vilanterol) which has just been approved in the US. 

Aside from Breo (known as Relvar outside the US), Elan will get royalties on sales of COPD combination therapy Anoro (umeclidinium bromide and vilanterol), vilanterol as a monotherapy and GSK961081, a development candidate in phase II which combines beta agonist and muscarinic antagonist activity in a single molecule.

GSK tapped into Theravance's portfolio of respiratory drugs in a bid to extend and defend its COPD franchise, currently headed by Seretide/Advair (fluticasone and salmeterol) which had sales of around £5bn ($7.6bn) last year but is facing generic competition.

With the latest deal Elan seems to be taking a cue from Royalty Pharma, which has built a business on buying royalty interests in the drug sector and has been keen to acquire the Irish company, although Elan insists the move is not designed to fend off its suitor. 

Earlier this year Royalty tabled a $5.7bn offer to buy Elan - which was subsequently rejected - after the latter transferred of rights to its multiple sclerosis therapy Tysabri (natalizumab) to Biogen Idec in a deal that brought in $3.25bn in upfront fees as well as a royalty stream.

The Biogen Idec deal left Elan with a warchest of around $2bn to invest in new projects, but the latest deal has taken pharma market watchers by surprise as many had expected the company to plump for a 'traditional' asset acquisition deal. 

Elan chief executive Kelly Martin said the deal was a "unique opportunity" that would allow the company to diversify its portfolio, adding that "further announcements regarding other assets" would be made in the near future.

"We strongly believe that there are a multitude of attractive opportunities across all parts of the industry value chain: science, clinical and commercial," he added.

Analysts have suggested Breo will make sales of $500m-plus in 2015, rising to as much as $2bn a year at peak, while Anoro could also make strong gains in the COPD sector reaching as high as $1.5bn.

13th May 2013

From: Sales

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