Elan links up with Fuisz to settle action
ELAN, the leading Irish pharmaceutical company, has settled a multi-million dollar law suit with Fuisz Technology by entering a $60m licence deal to manufacture drugs for Fuisz at its Athlone facility.
Fuisz owns Clonmel Healthcare which employs 200 people in Tipperary, and had sued Elan for $100m at the beginning of this year over what it claimed was a breach of an options agreement.
Elan has spare capacity in Athlone and will now manufacture around 1.2bn tablet doses for Fuisz which is under pressure to meet its manufacturing commitments to giant pharma companies, like Pfizer and Merck.
The Irish pharma company has also agreed to buy 5pc of Nasdaq quoted Fuisz from its founder Dr Richard Fuisz at a price per share above its recent lows.
The share price fell dramatically from a high of $15.62 to $6.12 when news about the dispute with Elan hit the market.
It is understood Elan paid Dr Fuisz a price nearer $15.62 rather than Monday's low, while Elan has also agreed to pay fees to Fuisz and nominate a member to the Fuisz board.
The Irish company would not comment last night, other than saying it was pleased the matter had been resolved.
Elan has spare manufacturing capacity because it is scaling back production of Cardizem as competitors will soon be able to make genetic versions of the hupertension treatment.
Chief executive officer of Fuisz Kenneth McVey told the Irish Independent yesterday the agreement would mean Elan would end up producing up to one third of its manufacturing needs by 2003.
Fuisz was also investing in its Clonmel facility to allow it to produce as many as an extra 1bn tablets by the end of this year, Mr McVey said.
Equity analyst with ABN Amro Philip Molloy said the removal of the possibility of litigation with the settlement was positive for Elan.
Meanwhile, Elan said yesterday it would invest $27m in a joint venture with US group Isis to develop technology for the oral delivery of genetic code blockers.
The Irish company said the investment consisted of $15m of common stock purchased at a premium to market and $12m of convertible exchangeable preferred stock.
Elan chairman and chief executive Donal Geaney said: ``This collaboration is consistent with Elan's long-term strategy of building multiple alliances with strong emerging technology companies.''
He added that Isis had made substantial progress in oral formulations of antisense drugs which represented huge opportunities for both companies.