Elan today reported a pre-tax loss of $88.6m for the first quarter of 2009, an increase on the pre-tax loss figure of $83.4m for the same time last year. Revenues rose by 14% to $245.1m from $214.7m mainly as a result of a strong performance from Elan's multiple sclerosis drug Tysabri. This offset reduced sales of its Azactam and Maixpime drugs. Sales of the MS drug Tysabri rose by 48%.
Elan said that revenues from its biopharmaceuticals business jumped by 28% in the first three months of 2009, while revenue from Elan's Drug Technologies business decreased by 14%.
Sales of Tysabri increased by 48% to $158.7m during the three month period, up from $107m for the first quarter of 2008. Elan reported that by the end of March, about 40,000 patients worldwide were using Tysabri, up 6% on the figure for December 2008.
Elan said its higher pre-tax losses werer due to the higher net charges - including restructuring charges of $22.2m - and research and development expenses, which was partially offset by the increase in revenues and lower net investment losses.
Last February Elan announced it would cut 230 jobs worldwide, including 115 at its Irish operations.
Elan CEO
Kelly Martin said that the company continued advancing its science toward patients, with particular focus on multiple sclerosis, Alzheimer’s disease and Parkinson’s disease. Martin noted that specific progress in the quarter included the continued growth of Tysabri and the advancement of Elan’s Alzheimer’s clinical portfolio.
Commenting on the company’s previously announced strategic review process, Martin said,“This process is continuing and we remain committed to exploring and objectively assessing all available options that balance the short-, intermediate- and long-term opportunities. We will communicate our progress at the appropriate time.”
Results detail
Goodbody analyst Ian Hunter commented: Elan (Sell, Closing Price $5.60); Q109 first glance - no progress on main drivers - -"Elan, this morning reported a steady set of Q109 numbers with a fully diluted loss per share of $0.22 from revenue of $245.1m. We were expecting a loss of 23c from revenue if $244.7m. However, within the numbers, we had incorporated a $50m payment to Biogen Idec for Elan to retain its 50% share of the Tysabri franchise, which was included in intangible assets. Elan did, however, book a $19.6m charge against its on-going restructuring programme. Within the revenue line, EDT disappointed with revenue down 14% yoy on timing of milestone payments.
Elan booked $158.7m in Tysabri revenue. Over the quarter, costs were 5% ahead of expectations with R&D and SG&A expenses of $80.5m and $71.0m. This meant that cash burn (cash reserves down from $434m at year end 2008 to $357m by March 2009 - $77m in the quarter) was greater than expected. No detail has yet been given on the impact of discontinuing the highest of three doses in the Phase III trials in ApoE4 non-carriers on: (i) the FDA’s stance on trial protocols; and (ii) patient recruitment. We await further detail in the conference call later today.
We understand that the timeline for the on-going strategic review outlined by Elan in mid-February referred to an internal reporting mechanism whereby Citigroup will be looking to report to the Elan board on progress within 10 weeks. The timing of when the potential outcome is reported to the market remains, therefore, less certain. No update was given in the results release. We will look for some guidance during the conference call. Incorporating our new Tysabri numbers into the model in itself will increase our full year losses by 5% due to the level of operating leverage in the model. As there is little in Q109 numbers to counteract this slippage, the risk to forecasts is to the downside."
