Irish pharmaceutical company Elan today posted a pre-tax loss of $129.8m for 2009, a 56% improvement on the loss in 2008.
The company said its revenue advanced 11% to $1.1 billion, led by a 30% increase in revenue from its Tysabri multiple sclerosis drug. Elan's share of Tysabri revenue came to $724.3m and 48,800 people are now using Tysabri worldwide, up 6% from the end of September and 30% compared with a year earlier.
Elan CEO Kelly Martin said, "during 2009, as the biotechnology industry continued to change significantly, we advanced our multi-year strategy for evolving the company. Our strategic transaction with Johnson & Johnson, now our largest shareholder, accelerated our positioning as a company that vigorously invests in science, technology and people while reducing inherent risks. In 2010, we will remain focused on building out Elan's unique mixture of science and technology while continuing to reduce risk and infrastructure so that we produce long term benefits for patients and provide a compelling investment thesis for shareholders."
Commenting on the results, Elan EVP and CFO, Shane Cooke said,"the Company was pleased to have met or exceeded all of its financial guidance for 2009, which reflected a particularly strong financial performance from the Biopharmaceuticals business and a significant improvement in the Company's liquidity and capital structure. Revenues grew by 11% to $1.1 billion, led by a 30% increase in revenues from Tysabri."
Results detail
Goodbody's Ian Hunter commented:"Elan issued a solid set of Q409 numbers this morning, reporting an EPS (ex-exceptional charges and charge on debt retirement) of 0.3c versus our forecast of -4.1c, from a 11% increase in revenue to $300m (we were expecting $310m). Actual reported losses, including a Prialt asset impairment and charge on debt retirement, were 10c. Topline growth was driven by Tysabri, which enjoyed a 32% increase in reported revenue to $200.5m, slightly behind our expectations ($210m). EDT revenue slipped 24% over Q408 to $68.1m ($75.3m forecast) and the remaining products (Maxipime, Azactam, et al.) generated $31.4m versus our expectation of $24.9m.
Yesterday, in its conference call, Biogen Idec noted that the upcoming long-term trial evaluating the effectiveness of switching to Tysabri after disease breakthrough in either Copaxone or Rebif (named SURPASS) will be meaningful, both in terms of patient numbers (1,800 planned), scope (multi-centre 18-month study) and, therefore, we presume costs. To this, we assume that the on-going development of JC virus assay tests will also add to R&D costs. On the SG&A side, Biogen Idec noted that it would be increasing sales and marketing spend through FY10 to defend its MS franchise, including Tysabri, against the expected approval of oral products.
In guidance, Elan expects to report operating profits in FY10, which will be achieved through continued revenue growth and reduced operating expenses. Gross margin is flagged at 45% to 50% (we have 48% in our forecast) with SG&A and R&D costs in the $475 to $525m range (we are at $520m). From this, we are currently forecasting Elan to report an operating profit of $87.4m in FY10. We will, however, finalise the degree of profit after discussion with management on both revenue expectations and costs, bearing in mind the cost implications of additional Tysabri trials and the flagged defence of its MS franchise, highlighted by Biogen Idec yesterday."
