Judge Sides With Biogen in Elan Fight; Tysabri Suicide-Pact Is Back to Square One

Last Updated Sep 3, 2009 6:55 PM EDT

A federal judge sided with Biogen in its dispute with Elan over rights to the MS drug Tysabri. The move was predicted by BNET Aug. 7.

The case is about whether Elan's financing deal with Johnson & Johnson breaks a joint venture agreement between Elan and Biogen. Biogen asserts that the deal breaks the agreement because it occurred without Biogen's consent, and Elan must now forfeit its rights in the drug. Elan sued Biogen to prevent that forfeiture.

In a hearing, Judge Deborah Batts said:

It appears to the court that Elan has delegated an obligation it has to Biogen, by taking direction from Johnson & Johnson.
The court gave Elan 28 days to "cure" the breach, meaning that it can tear up the contract with J&J and pretend nothing ever happened.

The events will be cheered at Biogen, which has been hurting for good news recently. Carl Icahn just forced out two members of Biogen's board, including one who was the head of R&D.

But while the Tysabri ruling was a "win" for Biogen, it merely moves Elan and Biogen back to Square One in the suicide-pact-cum-death-match that is now their Tysabri agreement. Neither party can get rid of the other without spending billions they don't have; and neither party can take on partners without the other's sign-off.