Blair Jackson of Alkermes discusses their merger with Elan Drug Technologies to create Alkermes plc

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Video title: Blair Jackson of Alkermes discusses their merger with Elan Drug Technologies to create Alkermes plc
Released on: July 15, 2011. © PharmaTelevision Ltd
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In this episode of PharmaTelevision News Review, Fintan Walton talks to Blair Jackson, Vice President of Business Development at Alkermes
Alkermes products
Fintan Walton:
Hello and welcome to PharmaTelevision News Review here in Oxford, England. On this show I have Blair Jackson, who is Vice President of Business Development and Program Leadership at Alkermes, welcome to the show.
Blair Jackson:
Thanks for having me.
Fintan Walton:
Blair, could you tell us a little bit more about Alkermes the company itself?
Blair Jackson:
Sure, Alkermes has been around for about 20-years or so and we were originally founded as a drug delivery company, and our original business model was to work with pharmaceutical companies and apply technology to their drugs to bring those to market and really to enhance patient outcomes. We worked in a variety of different technologies long-acting injectable, pulmonary delivery, transport across the blood-brain barrier, but we decided really about a decade ago to change our business strategy we recognized that if we wanted to drive our market cap and to really grow the company we needed to focus on proprietary product development. So we introduced and started working on our first product which was Vivitrol for the treatment of alcohol dependence and that took us about 8-years or so to bring that to marketplace but that was really a transformational event for the company and that allowed us to really test the waters with our own proprietary development. So over the last 20-years we've been quite successful in bringing a number of highly differentiated products to market, one being Risperdal-Consta with J&J [PharmaDeals ID = 161] which is marketed worldwide right now and sells about $1.5 billion, separately we work with Bydureon on Bydureon with Eli Lilly [PharmaDeals ID = 7731] and Amylin Pharmaceuticals [PharmaDeals ID = 5959] for the treatment of diabetes which was just recommended for approval in Europe and we hope to have approval shortly in the United States. So those are two really exciting drug delivery products that are coming to market and will drive near-term growth for Alkermes, and then Vivitrol as I mentioned earlier is a product that we have approved in United States in 2006 for alcohol dependence and we've been commercializing ourselves for a couple years as well.
Fintan Walton:
Okay, so you have a mixture of having your own products as well as developing products in partnership with other pharmaceutical companies?
Blair Jackson:
That's correct, yes.
Fintan Walton:
So your ultimate aim is to get products to market?
Blair Jackson:
Right, we are very product focused company.
Merger agreement with Elan Drug Technologies
Fintan Walton:
You've recently signed a definitive agreement to merge with Elan Drug Technologies which is a subsidiary of Elan Pharmaceuticals based in Ireland [PharmaDeals ID = 40623], what was the reason for that particular merger and what is the match for you?
Blair Jackson:
Well it's on many levels it's a quite an overlap with Alkermes, if you look at EDT itself they've had a very similar business model, they've been around about twice as long as us, but they started up in a same way which is developing products using a drug delivery model to apply their technology to enhance outcomes for patients and EDT has arguably been one of the most successful drug delivery companies or even product development companies in the industry with over 30 products over the course of their life time being approved in markets around the world. Additionally they have developed really world class manufacturing effort to support their drug delivery capabilities and that's a very strong overlap with the capabilities that Alkermes has. Additionally, EDT has also been taking a move towards developing their own proprietary products, so if you look at the philosophy of the two companies and the technology approach of the two companies they are very, very similar and we found that quite attractive as bringing that into Alkermes.
New Alkermes plc and key core programs
Fintan Walton:
In terms of the deal itself could you tell us how it's structured, we already know that there is about a $500 million that's gonna go to Elan itself Elan Pharmaceuticals and you are going to end up with owning a share in the new Alkermes, Alkermes plc could you tell us more about that?
Blair Jackson:
Yes it's correct, the financial terms of the transaction are that Elan will receive $500 million in cash from Alkermes as well as about 32 million shares of the Alkermes so they will end up owning approximately a quarter of Alkermes plc by the time the transaction is complete.
Fintan Walton:
So how would you describe the new Alkermes plc company?
Blair Jackson:
Sure, I mean I think in many ways this transaction is quite transformational for Alkermes in that it really diversifies our revenue stream on a wide basis, so if you look at the Alkermes plc we will drive revenue from 25 commercial products which are marketed in many countries worldwide and many of these products have won patent right and if you look at the product composite itself we're really been driven by five key core programs which will drive and provide us near-term growth and in areas where there are large pharmaceutical markets and patent protection into the mid to late 20's. So that's incredibly exciting for us if you look at our core programs, we have Risperdal-Consta for the treatment of schizophrenia , we have Risperdal-Consta for the treatment of schizophrenia bipolar disorder , Ampyra for really dealing with walking in patients with MS , Bydureon for the treatment of diabetes and Vivitrol for the treatment of alcohol dependence and relapse to opioid dependence and if you look at two of those programs that I mentioned Risperdal-Consta and Risperdal-Consta both are in the long acting a typical antipsychotic state and prior to the transaction there were some investors who expressed concern that Invega-Sustenna will erode some of the market share of Risperdal-Consta with this transaction we've really removed that debate from the table, the economics that we receive on both programs are relatively the same so as such what we think will happen and what we have seen happening to date is that those products will continue to grow along at the typical market, but very different to which product performs better relative to each other.
Debt financing
Fintan Walton:
I understand you are undertaking some debt financing to do this particular deal, is it debt financing done through normal means or is it done through royalty streams coming into Alkermes?
Blair Jackson:
No this is a normal debt financing, we are actually looking at the term loan for up to $450 million we've been backed up by Morgan Stanley and HSBC for that transaction and again as I mentioned earlier the debt markets right now are at the best they've been perhaps at least in my life time in this career and you can take advantage of those debt markets to really drive the grow, if you look at the overall transaction that we are doing we are able to readily service the debt on the revenue alone from EDT, but as I said it's a strictly a traditional term loan.
Fintan Walton:
There were several options for Alkermes going forward do you still think this is the right deal for you?
Blair Jackson:
I think by far this is a an incredibly good transaction for Alkermes to do at this time, I think from a timing perspective the debt markets are as good as they've ever been, we think from financially this will put us at a new level we will then this will provide us with the growth in the scale to do additional transactions and to continue to focus on our proprietary products, but the important thing now is that we can, we have the options of either retaining these products that we are developing in our pipeline for our own account or working with pharmaceutical partners in the future. So I think between the flexibility the new scale and the ability to really efficiently manage our company on a legal and financial basis this is a very good transaction for Alkermes at this point.
Fintan Walton:
Blair Jackson, thank you very much indeed for coming on the show.
Blair C. Jackson:
I appreciate Fintan, thanks for having me.
Fintan Walton
Dr Fintan Walton is the Founder and CEO of PharmaVentures . After completing his doctoral research on the genetics of cell proliferation at the University of Michigan(US)and Trinity College (Dublin, Ireland), Dr Walton gained broad commercial experience in biotechnology in management positions at Bass and Celltech plc (1982-1992).
Blair C Jackson
Vice President
Blair C. Jackson leads the business development and program leadership efforts at Alkermes. This encompasses all licensing efforts, new product evaluation, alliance management, and proprietary product development. Since joining Alkermes in 1999, he has served in various roles within the company in both a scientific and corporate capacity. Blair received a B.A. in Biochemistry from the University of Calgary, a B.A. in Chemical Engineering and an M.B.A. from the University of Alberta, and a Masters in Chemical Engineering Practice from the Massachusetts Institute of Technology.
PharmaVentures is a corporate finance and transactions advisory firm that has served hundreds of clients worldwide in relation to their strategic deal making in the pharmaceutical, life science and healthcare sectors. Our key offerings include: Transactions / deal negotiations; Product / technology valuations; Deal term advice; Due diligence & expert reports; Strategy formulation; Alliance management; and Expert opinion for litigation/arbitration cases. PharmaVentures provides the global expertise to ensure our clients generate the highest possible return on investment from all their deal making activities. We have experience of all therapeutic areas and can offer advice on both product and technology commercialisation.
Alkermes Inc. is a fully integrated biotechnology company committed to developing innovative medicines to improve patients' lives. Alkermes developed, manufactures and commercializes Vivitrol for alcohol dependence and manufactures Risperdal-Consta for schizophrenia and bipolar I disorder. Alkermes's robust pipeline includes extended-release injectable and oral products for the treatment of prevalent, chronic diseases, such as central nervous system disorders, addiction and diabetes. Headquartered in Waltham, Massachusetts, Alkermes has a research facility in Massachusetts and a commercial manufacturing facility in Ohio.