ELAN Corporation is investing $20 million in a new joint venture company in the US which will concentrate on the development of cancer treatment products. Elan has linked up with the American company Cytogen to establish Targon Corporation in which Elan will have the right to take equal ownership.
At the outset, Targon will have oncology products in its research pipeline for the treatment of solid and hematologic tumours, prostate cancer and a technology system for identifying prostate cancer in the blood.
The oncology pharmaceutical market is predicted to grow to an estimated $11 billion by the year 2002 and, according to Elan, represents one of the latest growing segments in the pharmaceutical industry.
Under the terms of the deal, Cytogen sold $5 million of its shares to Elan, the proceeds of which formed Cytogen's contribution to the new company. In addition, Cytogen sold $15 million of convertible preference shares to Elan and $10 million of this will be used to acquire certain products from Advanced Therapeutic Systems.
Elan has the option of exchanging the Cytogen preference shares for half of Cytogen's interest in Targon or into Cytogen ordinary shares. If Elan converts the preference shares into Targon shares, it will also receive a warrant to buy one million Cytogen ordinary shares at prices between $8.40 and $14.
If Elan converts the preference shares into Cytogen ordinary shares, a maximum of 1.78 million Cytogen shares will be issued to Elan.
