Moving to cement its position as the market leader for multiple sclerosis therapies, Biogen Idec Inc. said Wednesday that it has agreed to pay $3.2 billion and future contingent payments to acquire full rights to the blockbuster MS drug Tysabri.
The biotechnology company, based in Weston, said it would buy out the 50 percent share of Tysabri owned by its Irish partner, Elan Corporation PLC, which developed the treatment and sold half of the drug program to Biogen Idec in 2000.
“It’s a good drug that provides meaningful benefit to patients, and its sales have been growing at double-digit rates,” Biogen Idec chief executive George A. Scangos said in an interview. “We’re providing additional value to our investors, based on the price we paid.”
Biogen Idec’s stock climbed 2.3 percent Wednesday to a record high of $160.98.
The deal would give Biogen Idec complete control of Tysabri, its fastest growing product, which many doctors and patients view as one of the most effective MS drugs on the market.
The autoimmune disease affects the brain and central nervous system of an estimated 400,000 people in the United States and 2.5 million globally.
Biogen Idec last year rang up $1.1 billion from sales of Tysabri, second only to its lead MS drug, Avonex, which generated revenue of $2.9 billion, according to a company financial report last week. Biogen Idec is also awaiting Food and Drug Administration approval of its much anticipated MS pill, Tecfidera, and is developing another MS drug.
Scangos said Biogen Idec views the MS drug market in three segments. Avonex is a top seller of injectable treatments, and Tecfidera, if approved, could compete for leadership in oral therapies. Tysabri, a monoclonal antibody designed to block white blood cells that cause MS, is the leader in the market for “high efficacy” drugs that prevent nerve damage in patients with relapsing MS.
Under the deal unveiled Wednesday, Biogen Idec will terminate its collaboration with Elan, a Dublin-based drug maker, as well as a “change of control” agreement that gave either company the rights to buy out the other’s interest in Tysabri if a third company was moving to acquire it.
Going forward, Biogen Idec will control marketing and distribution rights, giving the Weston firm “more strategic flexibility,” Scangos said.
In exchange, Biogen Idec will pay $3.25 billion to Elan when the deal is completed. It will also make contingent payments to Elan equal to 12 percent of Tysabri’s global sales for the first year. After that, Biogen Idec will make payments of 18 percent on annual sales of Tysabri up to $2 billion and 25 percent on annual sales that exceed $2 billion.
“We believe the deal is a positive good use of cash,” Geoff Meacham, a senior biotechnology analyst for the financial firm J.P. Morgan Securities in New York, wrote in a note to investors. He expects it to add 50 to 60 cents a share to Biogen Idec earnings this year.
The credit rating agency Moody’s Investors Service, however, called the Tysabri deal a “credit negative” event for Biogen Idec, though it reaffirmed the company’s stable outlook.
“It’s using a lot of cash upfront on one asset,” said Moody’s senior vice president, Michael Levesque. “They already have a concentration in multiple sclerosis, and this does not add to their diversification.”
Tysabri was approved by the FDA in 2004 for sale in the United States. But it was temporarily pulled from the market the following year after some patients died from a rare brain infection called progressive multifocal leukoencephalopathy, or PML.
It was relaunched in the United States and approved for sale in Europe in 2006, and Biogen Idec has since developed a test that can help predict which patients might be vulnerable to the infection.
Scangos said Biogen Idec has a “fairly sophisticated” view of the MS market, recognizing that it faces increased competition. One rival, Cambridge-based Genzyme Corp., last week said the FDA had accepted for review its revised application to sell the MS drug Lemtrada. If approved, that drug would vie with Tysabri in the market for “high efficacy” therapies.