FTC investigates Elan

King Pharmaceuticals from Bristol, TN, US, and Irish Pharmaceutical company Elan, have both received a letter from the US Federal Trade Commission (FTC) stating that the FTC is conducting an investigation to determine whether any unfair methods of competition have been employed with respect to Elan's insomnia treatment, Skelaxin (metaxolone).

On January 30, 2003, King entered into a definitive agreement to acquire Elan's primary care business, including Sonata (zaleplon) and Skelaxin, in the US and Puerto Rico. Closing of the transaction, which has not yet occurred, remains 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.

Jefferson J. Gregory, chairman and ceo of King, stated: "Notice of the FTC's investigation raises serious concerns with respect to the consummation of our planned acquisition of Elan's primary care business. We will continue our review of the FTC's letter and investigation and evaluate our rights under the Company's Asset Purchase Agreement with Elan.'

Elan made no comment other than to confirm that the letter had been received. However, on news of the FTC's investigation, its share price fell by almost a third on the NYSE last Friday, while King's price fell by 7%.