N E W S R E L E A S E
(KING PHARMACEUTICALS LOGO)
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FOR IMMEDIATE RELEASE
KING PHARMACEUTICALS REACHES REVISED AGREEMENT TO PROCEED WITH
ACQUISITION OF ELAN'S PRIMARY CARE BUSINESS
PROVIDES REVISED FINANCIAL PROJECTIONS REFLECTING TRANSACTION
BRISTOL, TENNESSEE, May 20, 2003 - King Pharmaceuticals, Inc. (NYSE:KG)
announced today that the Company has reached an agreement with Elan Corporation,
plc (NYSE:ELN) that restructures the terms of the Asset Purchase Agreement dated
January 30, 2003. Pursuant to the revised terms of the agreement, the previously
announced planned acquisition of Elan's primary care business in the United
States and Puerto Rico is expected to close by the end of June 2003, subject to
the satisfaction of certain contingencies, including approval by the holders of
a majority of the outstanding common stock of Elan and other customary
conditions. King and Elan have also agreed to suspend litigation between King
and Elan relating to the original agreement until the closing of the
transaction, at which time the litigation will be dismissed.
Elan's primary care business includes two branded prescription pharmaceutical
products, as well as rights to potential new formulations of the products, and
Elan's experienced primary care field sales force consisting of approximately
375 individuals. The products include Sonata(R) (zaleplon), a nonbenzodiazepine
treatment for insomnia, and Skelaxin(R) (metaxalone), a muscle relaxant, in the
United States, its territories and possessions, and Puerto Rico ("Territories"),
and related New Drug Applications ("NDAs"), trademarks, copyrights, patents, and
licenses to certain patents associated with potential new formulations of such
products. As part of the transaction, King will acquire certain intellectual
property, regulatory filings, and other assets relating to Sonata(R) directly
from Wyeth Pharmaceuticals.
Under the restructured agreement, the total consideration paid by King at
closing will equal approximately $750 million. King will deposit $400 million in
escrow in anticipation of closing. The $750 million purchase price includes the
transfer of inventory with a value of approximately $40 million. Net sales of
Sonata(R) and Skelaxin(R) in the Territories totaled approximately $238 million
during 2002.
Jefferson J. Gregory, Chairman and Chief Executive Officer of King, stated, "We
are pleased to announce that we have reached a new agreement that permits us to
proceed with the acquisition of Elan's primary care business, which includes
Sonata(R) and Skelaxin(R). The addition of Elan's dedicated primary care field
sales force of approximately 375 individuals to our established sales and
marketing capabilities should particularly well position Sonata(R) for long-term
growth and significantly enhance the Company's ability to successfully promote
and grow our other branded prescription pharmaceutical products."
Sonata(R) is a nonbenzodiazepine short-acting treatment for insomnia, with most
patients experiencing the onset of sleep within ten to twenty minutes of taking
the drug. With a short half-life of approximately one hour and a four to five
hour duration of action, the product can be taken in the middle of the night
without residual side effects such as drowsiness, loss of memory, or impact on
psychomotor skills.
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Sonata(R) was developed by Wyeth and approved for marketing in the United States
in 1999. Sonata(R) has Hatch-Waxman exclusivity through August 2004 and a
composition of matter patent which the U.S. Patent and Trademark Office is
expected to extend through June 2008. Net sales of Sonata(R) totaled
approximately $93 million during 2002.
In connection with the transaction, King and Elan will enter into a
Reformulation Agreement whereby Elan will continue its ongoing development of
new formulations of Sonata(R), including an extended release product. King will
reimburse Elan for the direct costs incurred in connection with the formulation
development program for Sonata(R), and will pay Elan potential payments totaling