Elan Drug Technologies.

In May, the drug-delivery specialist Alkermes announced it would merge with Elan Drug Technologies (EDT), the chemical formulation and manufacturing unit of Dublin-based Elan. The Irish firm will receive $500 million upfront and a 25% stake in the new company Alkermes, worth ∼$460 million. The merger enables Alkermes to offer a slow-release system not only for small molecules but also for biologic drugs. For Elan, the cash infusion will reduce its considerable debts and enable the biotech to focus on developing drugs for neurological disorders. “The deal is the best possible solution for everyone involved,” comments Adrian Howd, a biotech and healthcare analyst for Berenberg Bank in London. After the merger, Waltham, Massachusetts–based Alkermes can exploit EDT's drug delivery platforms, including controlled release platforms for drugs that solubilize poorly in water. Over two decades, Alkermes built its business by partnering with pharma to combine small-molecule drugs with its proprietary slow-release microspheres delivery platform Medisorb. The once-monthly Vivitrol (naltrexone), an injected opioid receptor blocker to treat addictions, was developed in house. The company's revenues might soon be boosted by Bydureon, a once-weekly formulation of Byetta (exenatide) recommended for approval in April by the European Medicines Agency for treating type 2 diabetes. Bydureon was developed by San Diego–based Amylin and Eli Lilly of Indianapolis, using Alkermes' Medisorb sustained release drug delivery technology. With the merger, Alkermes gains EDT's platform technologies to expand the scope of delivery solutions, as well as revenue from drugs such Invega Sustenna (paliperidone palmitate) for schizophrenia and Ampyra (dalfampridine) for multiple sclerosis that incorporate EDT technologies. The sale has helped Elan boost its business prowess. At the end of May, Elan announced a partnership with Cambridge, Massachusetts–based Proteostasis to develop small-molecule drugs and diagnostics to treat central nervous system disorders. Elan's key drug is Tysabri (natalizumab) approved to treat multiple sclerosis. The partnership with Alkermes is a clear signal of Elan's intent to focus on neurological disease—a wise move says biotech analyst Steve Yoo, at Leerink Swann Investment Bank in New York because “the market is large and continues to grow.” The companies said they expect the deal to close before the end of September, at which point Alkermes intends to move its headquarters to Ireland to take advantage of lower corporate tax rates.