Emisphere Technologies, Inc. has entered into an agreement to repay its outstanding note to Elan Corporation PLC in cash and stock.

Under terms of the new agreement, Emisphere will pay Elan a total of $26 million cash and up to 1.2 million shares of common stock in instalments through June 30, 2005. The current accrued value of the note is approximately $44 million, the company said in a release.

Emisphere had entered into a joint venture with Elan to develop oral heparin in 1996. In connection with the re-purchase of Elan's joint venture interest in 1999, Emisphere issued a zero coupon, $20 million note maturing in July 2006, for $55 million.

"This is an important transaction for us as it will remove all significant debt from our balance sheet on very favourable terms," commented Michael Goldberg, chairman and CEO of Emisphere Technologies. "Achieving this resolution with Elan culminates an important year for Emisphere, and we are now positioned to bring our late stage oral heparin product forward and see significant progress in our partnered programmes over the next year," he added.