Elan, the Irish drugs company, today reported annual
operating profits in 2010, before other charges and gains,
for the first time since 2001. The annual net loss increased from $176.2m to $324.7m.
Revenues for the 12 months to the end of December rose by 5%
to $1.2bn, headed by an 18% increase in revenues from its
multiple sclerosis (MS) drug Tysabri.
CFO Shane Cooke said the revenue
increase combined with a 9% decrease in operating expenses,
before other charges and gains, led to a significant
improvement of 73% in Adjusted EBITDA (earnings before
interest, taxes, depreciation, and amortization) to $166.5m.
As a result Elan recorded operating
profits, before other charges and gains, for the first time
since 2001. Total debt fell by 17% and Cooke said although
the results reflect an improved operating performance, the
net loss for the year increased from $176.2m to $324.7m.
The loss mainly related to a
settlement agreement on dubious selling practices Elan
reached with the US government regarding Zonegran for which
it recorded a charge of $206.3m and the inclusion of a net
gain in 2009 of $108.7m associated with a deal with
Johnson & Johnson.
Sales of the MS drug rose to $851.5m for the full year
from $724.3m in 2009. The number of patients using the drug
worldwide increased by 17% to about 56,000.
Davy's Jack Gorman commented:
"Elan ended the year positively with Q4 revenue growth
of 3% to $308.9m; adjusted EBITDA of $45.9m that compared reasonably
well with tough comps; and a modest loss per share of -1c on an
Compared to guidance, the Q4 and FY out-turn was better than
expectations – adjusted EBITDA of $166.5m compared to guidance of
approximately $150m. It was also modestly ahead of our own forecast
The main features of Q4 were:
Revenue growth of 3% was delivered by Tysabri and Ampyra. In
aggregate, these grew by 25% year-on-year (yoy) and offset the
elimination of Maxipime and Azactam and the genericisation of
Operating costs were broadly as expected, +12% yoy and all driven
by R&D spending.
Gross cash and equivalents totalled $657m ($453.3m excluding the
Zonegran settlement). This compares to guidance of approximately
$400m and our own forecast of $436m.
For 2011 guidance, Elan has outlined that revenue growth will
accelerate beyond the 2010 rate of 5% (Davy: +12%); adjusted EBITDA
of approximately $200m (Davy: $225m); operating costs of $470-500m
(Davy: $534m). Elan also expects to be cash flow positive this year
(we have a net cash inflow of $56m).
More colour on guidance and R&D updates is likely to be provided
on the conference call at 13.30 GMT: +1 303 223 0114 [outside US];
800 747 9564 [in US].
Davy View: These are strong numbers from Elan and highlight
Tysabri's operational leverage in the P&L and cash flow model. This
leverage will become even more apparent in 2011. We will review our
own forecasts in light of guidance, but our first instinct is that
we are comfortable to remain somewhat above base guidance."