Elan could receive drug royalty payments

DUBLIN-based pharmaceutical company Elan could start benefiting from royalty payments from a new drug being developed by Johnson & Johnson as soon as next year.

Johnson & Johnson’s injection treatment for patients with schizophrenia — Paliperidone Palmitate — was lodged as a new drug application to the Food and Drug Administration (FDA) in the US last October.

The FDA is expected to give the green light for the commercialisation of the treatment later this year.

If that happens, a big beneficiary — apart from Johnson & Johnson — will be Elan. That is because, the Irish firm’s patented NanoCrystal technology was used in the manufacture of the treatment.

It is the first product of its kind using the technology that has been submitted to a health authority for commercialisation.

Under the terms of the license agreement between the two companies, Elan is eligible to receive a one-off payment upon the achievement of certain milestones by the drug. Additionally, Elan will receive rolling royalty payments based on sales of the product, if it is successfully commercialised.

Early estimates suggest that the new drug could achieve sales of around $1 billion (€681m) per year for Johnson & Johnson. On average, one person in every 100 develops schizophrenia. In the US alone about two million people currently suffer from the illness.

The NanoCrystal technology used in the production of this new treatment, is part of a suite of capabilities designed by Elan’s Drug Technologies division.

Last week, Elan said that it should see total group revenue grow by more than 30% this year, to about $1bn, on the back of an expected strong performance from its headline drug, Tysabri — which treats multiple sclerosis internationally and also Crohn’s Disease in the US — which it co-owns with US pharmaceutical giant, Biogen Idec.