Elan signs new licensing agreement

Elan has signed a new licensing agreement with Bristol-Myers Squibb that will allow the firm to use the Irish company's nanocrystal technology in drug development.

The licence agreement has been concluded by Elan's drug delivery business, which is known to be up for sale.

Elan did not reveal the financial terms of the licensing agreement yesterday, saying only that it was the successful culmination of several years of collaboration with Bristol-Myers Squibb .

Elan's nanocrystal technology is designed to help the body to absorb drugs that are difficult to dissolve in water. It works by transforming the drugs into tiny particles.

In a separate development, a company that owes $9.4 million (€8.07 million) to Elan has said it will pay back the liability with equity rather than cash.

Nasdaq-listed Targeted Genetics confirmed yesterday that it had converted the debt to equity under an agreement drawn up in 1999 with Elan.

The deal will see Elan taking on 5.2 million shares in Targeted Genetics. At yesterday's prices, this holding would have been worth some $13.5 million. Elan now owns 7.7 million, or 11.7 per cent, of common shares in Targeted Genetics, as well as additional B shares that could be converted into 4.8 million common shares.

A spokeswoman for Elan said the deal was normal in the context of the company's restructuring process, which was launched last year when the firm fell into financial difficulties.

When asked why Elan had accepted stock rather than cash from Targeted Genetics, she pointed out that Elan had already surpassed its target to raise $1.5 billion through asset disposals.

The company's most recent results show that it recorded a profit on continuing operations in the second quarter of this year after recording a loss of more than $700 million in the same months of 2002.

In another announcement issued yesterday, US pharmaceutical firm Caraco said it had received regulatory approval for its generic version of Elan's muscle relaxant Zanaflex.

Elan's spokeswoman said the impact of generic competition on the drug had already been built into the firm's business plan. Shares closed 19 cents lower at €4.40 in Dublin last night.