Enzon Inc. signed an agreement with troubled Irish pharmaceutical company Elan Corp. plc to buy the North American and Japanese rights to Abelcet, Elan's drug for severe fungal infections, for $370 million in cash.
As part of the deal, which must still be approved by shareholders, Bridgewater, N.J.-based Enzon will acquire from Elan a sales force of about 60 who are responsible for marketing and selling the drug in the U.S. and Canada. Enzon also plans to buy Elan's 56,000-square-foot manufacturing facility in Indianapolis that is used to make Abelcet.
"This is a really good deal," CEO Arthur Higgins told BioWorld Today, adding that Enzon was already better positioned than many biotech companies by being very profitable. "It's a major step forward.
"Because we're in the fortunate position of having just short of $500 million in cash, we were invited to participate in most of the deal activity that's been occurring in the marketplace in the past 15 months," he said, referring to companies looking to partner or sell off products.
Elan, of Dublin, Ireland, announced over the summer that it would be restructuring and ending its focus on oncology, primary care and hospital care. In its recovery plan, details of which were issued July 31, Elan also reported that it would shed employees and assets outside its new areas of focus: neurology, pain and autoimmune diseases.
Elan's plan to divest provided a new opportunity for Enzon.
What Enzon didn't have - and gains through this transaction - was its own sales and marketing force. The deal met Enzon's requirements in other ways, too, Higgins said, such as being accretive and being consistent with the company's therapeutic pipeline and focus on oncology, hematology, transplantation infections and infectious diseases.
Abelcet, a lipid complex formulation, is used in hospitals to treat patients with invasive fungal infections related to cancer, organ transplantation and other conditions. The drug originally was developed by The Liposome Co., of Princeton, N.J., which was acquired by Elan for $587 million in stock in May 2000. (See BioWorld Today, March 7, 2000.)
The manufacturing facility Enzon is getting has a value of $12 million, compared to the associated intellectual property, which is valued at $200 million. Elan will continue to sell Abelcet outside the U.S., Canada and Japan, so the companies plan to enter a long-term manufacturing and supply agreement whereby Enzon would continue to manufacture products for Elan. The manufacturing facility produces not only Abelcet, but also Myocet, Elan's drug indicated for the first-line treatment of metastatic breast cancer in combination with cyclophosphamide. Myocet is a liposomal doxorubicin formulation.
Sales of Abelcet in 2002 are expected to total $80 million, Higgins said.
"The drug bolsters our bottom line," he said, noting that the total antifungal market is just short of $500 million and growing 20 percent annually. "So, if we're in shooting distance of the market, we'll do well," he said.
Higgins said the drug should contribute $50 million to Enzon's bottom line in fiscal year 2003, or 5 cents in fully diluted taxed earnings per share.
Enzon said that the sales force gained in the deal should be "more than sufficient" to sell one product. But Enzon expects to add more products to leverage fully the potential of that force, Higgins said.
Enzon has three FDA-approved products: Adagen, approved in March 1990; Oncaspar, approved in February 1994, a PEG-modified version of the enzyme L-asparaginase, which is used in chemotherapy for acute lymphoblastic leukemia; and PEG-Intron, approved in January 2001 for hepatitis C.
In April, Enzon signed a deal with Micromet AG, of Munich, Germany, to combine their patents and knowledge to develop single-chain antibody therapeutics, a focus of Enzon's. (See BioWorld Today, April 12, 2002.)
In January, Enzon entered an agreement with Inhale Therapeutic Systems Inc., of San Carlos, Calif., through which Inhale licenses Enzon's 40-plus U.S. PEG, or PEGylation patents to third parties. (See BioWorld Today, Jan. 9, 2002.)
Enzon's stock (NASDAQ:ENZN) fell $1 Wednesday to close at $18.40.