Elan, the Irish pharmaceutical
company, today reported a net profit of $68.2m for the first quarter of this
year, boosted by robust sales of its multiple sclerosis drug Tysabri and a 10%
cut in its day-to-day costs.
Revenue from Tysabri increased by 23% compared with a year earlier to $245.2m,
with 58,400 patients using the treatment at the end of March - - up 16% compared
with a year earlier. Elan said Tysabri growth offset the loss of revenue from
Total revenue was $313m, up from $310.5m a year earlier. Revenue from the
bioneurology business rose by 6%, but revenue in the EDT business fell 14%.
Elan's net profit was boosted by a once-off gain from a legal settlement, its
underlying earnings - - as measured by adjusted earnings before interest,
tax, depreciation and amortisation (EBITDA) - - also rose to $63.3m from
$61.4m a year earlier.
Elan CEO, Kelly Martin,
commented, "The first quarter results provide further
evidence as to our consistency in generating progress across all aspects of the
business. Revenue growth from Tysabri combined with disciplined expense
management has created meaningful operating leverage for the Company."
Martin added, "This is a unique time for Elan and we remain focused on driving
further operating leverage into our business. At the same time, we will continue
to intelligently invest in both science and clinical activities that may
differentiate Elan globally as it relates to innovation and focus on
Gorman commented: Analysis: "Tysabri remains the key variable in the Elan numbers
as it is the basis of future cash generation in the business. Global
revenues grew by 20% to $349.4m compared to $346m in our forecasts.
The pace of revenue growth exceeded that of patient growth (+16%);
we suspect this is likely to be foreign exchange-related and that
unit growth is broadly tracking patient numbers.
Net debt increased by
an estimated $117m in the quarter. When we strip out the effect of
the Zonegran payment (-$206.3m) and the receipt from the Abraxis
settlement (+$78m), underlying free cash flow looks to be circa
$11m. Though modest, it is a positive signal that cash flow is now
being generated by Elan despite its high R&D burden and its
The main features of
Revenues grew by 1%
to $313m (Davy forecast: $309.1m) as Tysabri growth offset the
elimination of Prialt, Maxipime and Azactam.
Gross margin was
50.1% compared to 53.1% last year. Last year was helped by higher
margin legacy products and the Ampyra launch.
Total operating costs
were reduced by 9%, a better-than-expected out-turn. This helped
adjusted EBITDA to exceed our forecast, at $63.3m versus $61.3m last
Tysabri patients on
commercial therapy totalled 57,800 at the end of Q1; 100 ahead of
our own forecast.
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
Davy View: The
Tysabri out-turn is as forecast despite a solid Q1 from new
competitor Gilenya ($59m). This would suggest the latter's effect
has been to either grow the market or take share from products other
than Tysabri. Results from the other competing products in coming
weeks will reveal this.
Positioning the JCV
assay as a tool to define PML risk is a key objective for Elan/BIIB
in 2011. Successfully executing on this could accelerate what is
currently very strong growth from Tysabri (please see our research
note dated April 13th).
Our first instinct is
to leave full-year forecasts unchanged; these are modestly ahead of