In press releases issued today, Elan (NYSE:ELN) and Biogen Idec (NASDAQ:BIIB) announced a restructuring of their 50/50 split of the profits from MS drug Tysabri that will give Biogen full rights to the drug and give Elan an upfront cash payment of $3.25 billion, in addition to ongoing payments.

Biogen has agreed to pay $3.25 billion, as well as a royalty of 12% of the profits from the drug, payable to Elan for the first 12 months of the new agreement. Following the initial year's payment and royalties, Biogen will pay Elan based on a tiered structure, whereby Elan will receive 18% of the first $2 billion in global Tysabri sales, and 25% of global sales exceeding $2 billion.

Biogen Idec anticipates the transaction will be approximately $0.20 to $0.30 accretive to 2013 GAAP earnings per share and $0.50 to $0.60 accretive to non-GAAP earnings per share, and will continue to be accretive thereafter.

According to Biogen CEO George Scangos, "This is a natural next step for Biogen Idec and TYSABRI, and it underscores our deep, long-term commitment to improving the lives of MS patients around the world." Elan CEO Kelly Martin said, "Our motivation was to diversify and de-risk the company to move forward; and for the patients to continue to benefit from the profound efficacy of Tysabri." Tysabri is approved for use in more than 65 countries.

The deal has been approved by the boards of directors of both companies, and is subject to a customary antitrust review. The transaction is expected to close by the end of the second quarter.



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