Elan Corp To Purchase NanoSystems In $150 Mill Deal

Ireland-based pharmaceutical company Elan Corp has signed a definitiveagreement to acquire drug delivery firm NanoSystems, a subsidiary of Eastman Kodak. The transaction, pending Irish and US regulatory approval, will be worth some $150 million, in a combination of $137 million in cash and warrants to purchase ordinary shares in Elan.

The deal, due to be completed by the fourth quarter of 1998, is expected to be earnings-neutral to Elan, both this year and in 1999, and NanoSystems will become part of Elan Pharmaceutical Technologies. Donal Geaney, Elan's chief executive, said the purchase of Nano-Systems enhances the firm's position "as a technology leader and preferred partner for bringing drug delivery solutions to its pharmaceutical clients." He added that the deal will "expand Elan's ability to overcome difficult drug delivery challenges," especially for water-soluble compounds which, Mr Geaney claims, account for 40% of the 100,000 New Chemical Entities synthesized by drugs firms each year.

This seems a sound acquisition for Elan, given the number of significant collaborations that the King of Prussia, Pennsylvania-based firm already has in place. As well as deals with American Home Products, Janssen Pharmaceutica and Warner-Lambert, NanoSystems recently entered into a new licensing agreement with Merck & Co, where it will receive $30 million in upfront payments plus royalties on sales of an undisclosed Merck product (Marketletter September 7).