SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN ISSUER
PURSUANT TO RULE 13A-16 OR 15D-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
For the period ended January 30, 2003
Elan Corporation, plc
(Translation of registrant's name into English)
Lincoln House, Lincoln Place, Dublin 2, Ireland
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual
reports under cover Form 20-F or Form 40-F.
Form 20-F /X/ Form 40-F / /
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes / / No /X/
This Report of Foreign Issuer on Form 6-K is incorporated by reference into
the Registration Statements on Form F-3 of Elan Corporation, plc (Registration
Nos. 333-10718, 333-10726 and 333-100252), the Registration Statement on Form
F-4 of Elan Corporation, plc and the Post-Effective Amendments thereto on Forms
F-3 and S-8 (No. 333-12756), the Registration Statement of Elan and Athena
Neuroscience Finance, LLC (No. 333-13130), and the Registration Statements on
Form S-8 of Elan Corporation, plc (Registration Nos. 333-13996, 333-12344,
333-11940, 333-09644, 333-09284, 333-09048, 333-08384, 333-07361, 333-07136,
333-14240, 33-27506 and 333-100556).
FOR IMMEDIATE RELEASE
CONTACTS:
INVESTORS: (U.S.) INVESTORS: (EUROPE) MEDIA:
Jack Howarth Emer Reynolds Sunny Uberoi
Ph: 212-407-5740 Ph: 353-1-709-4000 Ph: 212-994-8206
800-252-3526 00800 28352600 800-252-3526
ELAN TO SELL PRIMARY CARE FRANCHISE TO KING FOR $850 MILLION
- ELAN TO RECEIVE A CASH PAYMENT OF APPROXIMATELY $650 MILLION ON CLOSING
INCLUDING AN ESTIMATED $40 MILLION FOR INVENTORY
- KING TO ASSUME ELAN'S PRODUCT RELATED PAYMENTS FOR SONATA OF APPROXIMATELY
$240 MILLION
- ELAN MAY RECEIVE UP TO AN ADDITIONAL $60 MILLION IN NET MILESTONE PAYMENTS
RELATING TO THE DEVELOPMENT OF ENHANCED FORMULATIONS OF SONATA
- AS SEPARATELY ANNOUNCED TODAY, ELAN HAS ACQUIRED FROM PHARMA OPERATING LTD.
ROYALTY RIGHTS TO SONATA
DUBLIN, IRELAND, January 30, 2003 -- Elan Corporation, plc (NYSE: ELN) ("Elan")
announced today it has agreed to sell its primary care franchise (principally
its rights to Sonata(TM)(zaleplon) and Skelaxin(TM)(metaxalone) and related
rights to enhanced formulations of these products) to King Pharmaceuticals, Inc.
(NYSE: KG) ("King"). Under the terms of the agreement, which is subject to
Elan's shareholder approval, Elan will receive a cash payment, upon closing, of
approximately $650 million, including an estimated $40 million payment for
Sonata and Skelaxin inventory. King will acquire the inventory from Elan at
closing and consequently the $40 million estimated value may be subject to
change. King will assume Elan's product related payments for Sonata of
approximately $240 million. In addition, Elan may earn net milestone payments of
up to $60 million contingent on the achievement of clinical and regulatory
milestones relating to the development of enhanced formulations of Sonata. Elan
expects to record a pre-tax gain of approximately $370 million from this
transaction, before taking account of any charge related to the purchase of
royalty rights attaching to Sonata from Pharma Operating Ltd., a wholly-owned
subsidiary of Pharma Marketing Ltd.
Elan to Sell Primary Care Franchise to King for $850 Million
THE TRANSACTION
Elan's primary care franchise comprises the U.S. and Puerto Rican rights to
Sonata, U.S. and Puerto Rican rights to Skelaxin along with related assets and
liabilities, rights to the enhanced formulations of Sonata and Skelaxin, and the
U.S. primary care sales team of over 400 employees. Consistent with previous
divestment transactions, the primary care employees will be offered the
opportunity to continue to contribute to the success of Skelaxin and Sonata as
employees of King. As part of the transaction, King will acquire certain
intellectual property, regulatory and other assets relating to Sonata directly
from Wyeth.
These cash proceeds and assumed product related liabilities will bring the total
consideration realised and to be realised pursuant to previously announced
transactions through the asset divestiture program to over $1.6 billion.
Dr. Garo Armen, chairman of Elan, said "With the sale of our primary care
franchise we have exceeded our target of raising $1.5 billion from the
divestiture program, a year ahead of schedule." "This completes the first stage
of Elan's recovery plan and allows us to concentrate on our core development
pipeline which we expect to start launching in 2004. We will continue to divest
non-core businesses and assets to further improve our liquidity; in addition we
continue to reduce our costs, streamline our balance sheet, manage our
commercial operations and prioritize our pipeline."
Dr. Armen continued, "The sale of these assets is consistent with our strategy
to divest assets outside of Elan's core therapeutic areas. While the primary
care franchise is no longer core to our business, we are pleased to have reached
this agreement with King, which is in a strong position to leverage the talents
of our primary care team and product portfolio."
DRUG DELIVERY PROGRAMS
Under the terms of the agreement, Elan will also continue its development
programs for enhanced formulations of Sonata and Skelaxin using its proprietary
drug delivery technologies on behalf of King. This development work will be
performed pursuant to formulation development agreements with King. Under the
Sonata formulation development agreement, Elan will receive development fees
and, if successful, may receive net milestone payments of up to $60 million
(comprising up to $85 million in clinical, regulatory and
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Elan to Sell Primary Care Franchise to King for $850 Million
sales milestones less up to $25 million in milestones that Elan is obligated to
pay a third party). Elan will manufacture the products under a royalty-bearing
license. Elan will also retain the commercialization rights to enhanced
formulations utilizing its technology outside the U.S. for both products.
SONATA
For the first nine-months of 2002, Elan recorded net revenue and gross profit
for Sonata of $72.0 million and $61.8 million, respectively. The carrying value
of the Sonata intangible asset as at December 31, 2002, amounted to $165.5
million, excluding contingent and potential payments of $231.2 million. In
addition at December 31, 2002, goodwill associated with the primary care
franchise amounted to approximately $40 million.
Sonata is a nonbenzodiazepine hypnotic for the short-term treatment of insomnia.
Sonata was originally launched by Wyeth in 1999. On December 19, 2001, Elan
entered into a strategic alliance with Wyeth pursuant to which it assumed
responsibility for the marketing, sales and distribution of Sonata in the United
States.
SKELAXIN
For the first nine-months of 2002, Elan recorded net revenue and gross profit
for Skelaxin of $125.5 million and $103.7 million, respectively. The carrying
value of the Skelaxin intangible asset as at December 31, 2002 amounted to $30.6
million.
Skelaxin is approved by the U.S. Food and Drug Administration as an adjunctive
treatment for the relief of discomfort associated with acute, painful
musculoskeletal conditions. Elan originally acquired Skelaxin through its
acquisition of GWC Health, Inc. `in 1998.
SHAREHOLDER APPROVAL
To comply with the listing requirements of the Irish Stock Exchange and the U.K.
Listing Authority, the transaction is subject to the approval of Elan's
shareholders at a special meeting. A circular, setting out in more detail the
terms of the proposed transaction and the resolution to be put at the special
meeting will be sent to shareholders as soon as practicable. The transaction is
also subject to regulatory approvals, third party consents and other customary
conditions, and is expected to close before the end of April 2003.
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Elan to Sell Primary Care Franchise to King for $850 Million
Elan was advised on this transaction by Morgan Stanley.
ABOUT ELAN
Elan is focused on the discovery, development, manufacturing, selling and
marketing of novel therapeutic products in neurology, pain management and
autoimmune diseases. Elan shares trade on the New York, London and Dublin Stock
Exchanges.
This document contains forward-looking statements about Elan's financial
condition, results of operations and business prospects that involve substantial
risks and uncertainties. You can identify these statements by the fact that they
use words such as "anticipate", "estimate", "project", "envisage", "intend",
"plan", "believe" and other words and terms of similar meaning in connection
with any discussion of future operating or financial performance or events.
Among the factors that could cause actual results to differ materially from
those described herein are the following: the outcome of Elan's recovery plan
and its ability to maintain flexibility and maintain sufficient cash, liquid
resources, and investments and other assets capable of being monetized to meet
its liquidity requirements; the risk that Elan's shareholders will fail to
approve the sale of the primary care franchise, that regulatory approvals and
third party consents necessary to consummate the sale will not be received on a
timely basis, or at all, or that the further conditions necessary to consummate
the sale will not be satisfied on a timely basis, or at all; the outcome of the
ongoing SEC investigation and shareholder litigation; the success of research
and development activities and the speed with which regulatory authorizations
and product launches may be achieved; competitive developments affecting Elan's
current products; the ability to successfully market both new and existing
products; difficulties or delays in manufacturing; the ability to meet generic
and branded competition after the expiration of Elan's patents; trend towards
managed care and health care cost containment; possible legislation affecting
pharmaceutical pricing; exposure to product liability and other types of
lawsuits; Elan's ability to protect its intellectual property; interest rate and
foreign currency exchange rate fluctuations; governmental laws and regulations
affecting domestic and foreign operations, including tax obligations; general
changes in US and Irish generally accepted accounting principles; growth in
costs and expenses; changes in product mix; and the impact of acquisitions,
divestitures, restructurings, product withdrawals and other unusual items. A
further list and description of these risks, uncertainties and other matters can
be found in Elan's Annual Report on Form 20-F for the fiscal year ended December
31, 2001, and in its Reports of Foreign Issuer on Form 6-K. Elan assumes no
obligation to update any forward-looking statements, whether as a result of new
information, future events or otherwise.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ELAN CORPORATION, plc
By: /s/ William F. Daniel
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William F. Daniel
Company Secretary
Date: January 30, 2003