UPDATE: Elan 2Q Net Loss Narrows On Cost-Cuts, Tysabri
July 21 2009 - 4:14AM
Dow Jones News
Elan Corp. (ELN) Tuesday reported a narrower second quarter net
loss due to cost cutting and increased demand for its multiple
sclerosis drug Tysabri, and said it's on target to be profitable in
2009.
Net loss narrowed 4.6% to $68.2 million from $71.5 million a
year ago, while basic and diluted loss per share narrowed to $0.14
from $0.15.
Revenue in the quarter rose 14.4% to $281 million from $245.6
million, helped by increased sales of Tysabri, as well as contract
manufacturing revenues.
Elan has said it's confident that Tysabri - a joint venture with
U.S. firm Biogen Idec (BIIB) - is a blockbuster drug and revenues
will approach $1 billion.
Elan Chief Executive Kelly Martin said, "During the first six
months of 2009, we grew revenues, added an additional approach to
Alzheimer's disease and successfully completed our strategic review
with the announcement of a transformative transaction with Johnson
& Johnson."
As part of the deal announced earlier this month, Johnson &
Johnson (JNJ) will acquire the assets and rights of Elan's
Alzheimer's program co-partnered with U.S. firm Wyeth (WYE) and
invest $1 billion in Elan in exchange for new American Depositary
Receipts of the Irish firm, representing 18.4% of its outstanding
ordinary shares. Elan will retain a 49.9% interest in the new
Johnson & Johnson subsidiary holding those assets.
Johnson & Johnson will assume and continue Elan's 50-50
joint venture Alzheimer's program with and will initially commit up
to $500 million toward the development and launch of Alzheimer's
treatment bapineuzumab, or AAB-001.
Analysts say the J&J deal has wiped a significant risk off
the balance sheet, but volatility on the share price remains.
Last week, Biogen Idec reported worldwide Tysabri sales of $255
million with 42,700 patients on the drug at the end of the second
quarter. The patient numbers imply an average acquisition rate of
around 250 new patients per week, and some analysts see this
increasing to 350 people per week by the third quarter.
Tysabri was in June 2006 approved for use primarily as a
monotherapy for relapsing and remitting MS patients by the two
regulatory agencies in the U.S. and E.U.
Elan said it expects to be profitable in 2009, on an adjusted
earnings before interest, tax, depreciation and amortization
basis.
Its net debt at the end of the second quarter was $1.48 billion,
$19 million above forecast. Net cash burn in the second quarter was
$77 million.
At 0730 GMT Tuesday, Elan stock was flat at EUR5.68 in Dublin,
down from about EUR22 a year ago.
Given the recent J&J agreement and some comfort on recent
Tysabri trends, Davy Research will upgrade its 2010 adjusted Ebitda
to approximately $240 million from $187 million currently. Davy
reiterates its "outperform" rating, saying "the growth story
continues at the company."
Company Web site: www.elan.com
-By Quentin Fottrell, Dow Jones Newswires; +353-1-6762189;
quentin.fottrell@dowjones.com