Biogen partner sues over $1.5b J&J agreement
A partnership between the Irish drug maker Elan Corp. and Cambridge biotechnology company Biogen Idec Inc. has turned into a legal battle over a multiple sclerosis drug, Tysabri.
The drug “has blockbuster potential,’’ said Jennifer Neiman, a spokeswoman for Biogen, and is projected to gross more than $1 billion in sales.
Yesterday, Elan filed a federal suit against Biogen to stop it from interfering with a recent $1.5 billion deal with Johnson & Johnson. The agreement was for J&J to buy an 18.4 percent stake in the Irish company and fund further development of drugs to treat Alzheimer’s. It also provides for J&J to pay for Elan to buy out Biogen’s 50 percent stake of Tysabri, should the Cambridge biotech’s ownership change.
On July 28, Biogen sent a letter to Elan alleging that it broke the agreement, which gives both companies the right to buy out the other’s share of the drug should there be a change of control at either company.
Billionaire investor Carl Icahn has placed two representatives on Biogen’s board and has made it clear he is seeking a sale of the company. J&J’s agreement with Elan could give it enough control over Tysabri to drive away competitors if it makes its own play for Biogen.
“Based on Elan’s past public statements, it’s our current understanding that their deal with J&J constitutes a material breach’’ of its nine-year collaboration with Biogen, Neiman said.
The Biogen letter started a process giving Elan 60 days to “cure’’ any breach or go to court, which could allow Biogen to terminate the agreement and take control of Tysabri.
According to its complaint, Elan said it has not breached its agreement with Biogen. Elan declined to comment further. “What we’ve asked is that they provide us with greater transparency on the terms of their deal,’’ said Biogen’s Neiman.
Morton Pierce, chairman of the mergers and acquisitions practice at the New York law firm Dewey Ballantine LLP, said it is impossible to objectively guess at the motives behind the suit though, to him, it seems baseless.
“I haven’t read the agreement; it’s been described to me. But it doesn’t seem to me that anyone has violated any agreement,’’ he said. “A lawsuit certainly brings the issue into focus, and people will certainly see who is right and who is wrong.’’
Material from Globe wire services was used in this report. Sean Sposito can be reached at ssposito@globe.com. 
