Elan seals $114m deals to reduce debt

ELAN yesterday announced it will receive a $114 million cash injection in two separate deals designed to further reduce its huge debt.

Some $100m has been paid to the Athlone-based pharma giant Ligand Pharmaceuticals following a restructured licensing deal.

It was later announced that scientific instrument firm Novitron is to buy Elan’s chemistry instrument subsidiary, Elan Diagnostics, for $14.6m.

The share price was up 18c (6.5%) in Dublin to 2.95 by early afternoon trading after the Ligand announcement.

Elan has a licence and supply agreement with Ligand for the morphine-based pain drug Avinza, but agreed to cut royalty payments from the firm in exchange for the $100m in cash.

The deal was agreed last month but the payment has just been made.

Elan told investors the proceeds from the amended agreement with Ligand will form part of Elan’s “targeted proceeds” as outlined in its recovery plan.

But it added that it may in the future look at new and different ways of reducing the debt burden on its balance sheet. The share price of the firm has completely collapsed, losing more than 95% of its value since January amid concerns about its accounting procedures and reduced revenues due to generic competition.