Elan will receive $750m from King Pharmaceuticals following agreement over the sale of its muscle relaxant Skelaxin and sleep drug Sonata. The Elan/King lawsuit, which was to have reached court today, has now been dropped.
Elan will also receive an additional $25m payment in January of next year as long as the Skelaxin patent remains exclusive, and will also receive a percentage of sales.
When the disposal of Sonata and Skelaxin are concluded, Elan's asset sell-offs will have amounted to $1.6 billion. Last March King had tried to get out of the deal after it said it was reconsidering the situation.
A new development in the deal will see Elan get payments of 5% of net sales of the current formulation of Skelaxin until December 31 2005, then, from 2006 to December 3, 2021, Elan will receive payments of 10% of net sales of the current formulation of Skelaxin in excess of $50m annually.
Analysts agree that the amended deal will provide Elan with much needed cash to pay off its $2.6 billion debt.
In January King Pharmaceuticals had agreed to pay $850m for the rights to Sonata and Skelaxin, but had threatened to pull out of the deal with US regulators started to investigate whether Elan had unfairly blocked a generic rival of Skelaxin.
Elan shares closed 32 cent higher at €4.06 in Dublin this evening.
