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This excerpt taken from the ELN 20-F filed Mar 30, 2006. Sale
of Businesses — Continuing
Operations
During the course of the recovery plan and subsequent
realignment of our operation as a biotech company, we sold a
number of businesses (principally Zonegran, the primary care
franchise and the European sales and marketing business), which
are not included in discontinued operations because we have a
significant continuing involvement in the operations of these
businesses, for example, through ongoing supply arrangements or
formulation activities.
For the years ended December 31, 2005, 2004 and 2003, the
net gain/(loss) from the disposal of businesses is presented
below (in millions):
We did not dispose of any businesses in 2005. The net gain in
2005 resulted from receipts of deferred contingent consideration
related to prior year disposals, as described below.
Table of Contents
Elan
Corporation, plc
NOTES TO
THE CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
In April 2004, we completed the sale of our interests in
Zonegran in North America and Europe to Eisai for a net total
consideration of $113.5 million at closing. We were also
entitled to receive additional consideration of up to
$110.0 million from Eisai through January 1, 2006,
primarily contingent on the date of generic Zonegran approval.
We received $85.0 million of this contingent consideration
prior to the genericization of Zonegran in December 2005.
Consequently, the total net proceeds received from the sale of
Zonegran amounted to $198.5 million and resulted in a
cumulative net gain of $128.5 million, of which
$85.6 million was recognized in 2005 and $42.9 million
in 2004.
In February 2004, we sold our European sales and marketing
business to Zeneus for net cash proceeds of $93.2 million,
resulting in a loss of $2.9 million. We received an
additional $6.0 million in February 2005, which was accrued
at December 31, 2004, and $15.0 million in December
2005 of contingent consideration, which resulted in a net gain
of $17.1 million in 2005 after the release of contingent
liabilities of $2.1 million, which were not required
ultimately. We will not receive any further consideration in
respect of this disposal.
In 2003, a net gain of $264.4 million was recognized on the
divestment of the primary care franchise to
King Pharmaceuticals, Inc. (King) (principally our rights
to
Sonatatm
(zaleplon) and
Skelaxintm
(metaxalone)). In June 2003, King paid gross
consideration on closing of $749.8 million, which included
the transfer to King of Sonata and Skelaxin inventory with a
value of approximately $40.0 million and obligations related to
Sonata of $218.8 million that were assumed by King. In
addition, in January 2004, we received an additional
$25.0 million payment, which was contingent on the ongoing
patent exclusivity of Skelaxin through December 31, 2003.
The amount was included in the gain recorded in 2003 as the
contingency was resolved by December 31, 2003.
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