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Elan trims losses, confident of Tysabri comeback
Tue Jan 31, 2006 10:42 AM ET

By Paul Hoskins

DUBLIN, Jan 31 (Reuters) - Elan (ELN.I: Quote, Profile, Research) posted a smaller-than-expected fourth-quarter loss on Tuesday, saying it was well placed for a return to profitability and confident its suspended multiple sclerosis drug Tysabri would make a comeback.

Ireland-based Elan's (ELN.L: Quote, Profile, Research) net loss was $0.14 per share in the three months to the end of December, almost half the $0.27 per share loss seen in the same period of 2004 and better than the $0.185 median forecast of 10 analysts polled by Reuters.

That brought its full-year loss to $0.93 per share.

Revenues for the fourth quarter were $140.4 million compared to expectations of $127 million, boosting full year sales to $490.3 million from the $481.7 million achieved in 2004.

"The progress we have made in improving our operating leverage will accelerate our return to profitability," Elan Chief Financial Officer Shane Cooke said.

Elan slashed costs after pulling Tysabri in February following the death of a patient. The drug's fate is key to restoring Elan's fortunes after a brush with bankruptcy in 2002.

That means a U.S. Food and Drug Administration meeting on March 7 to weigh up Tysabri's risks and benefits is the main concern for investors, analysts say, but in the interim Tuesday's results showed the company to be in good shape.

"Elan this morning reported a strong set of results for the ongoing business ... driven by a combination of stronger revenue coupled with better-than-forecast cost control," said Ian Hunter, analyst at Goodbody stockbrokers.

Adjusted to exclude costs related to getting Tysabri back on the market, Elan said its 2005 loss before interest, tax, depreciation and amortisation (EBITDA loss) was $216.9 million and better than the group's $240 million to $260 million goal.

Elan said it expected negative 2006 EBITDA, excluding Tysabri related revenues, of $150 million to $175 million and forecast that next year's revenues, even without Tysabri, would exceed $500 million versus $490.3 million in 2005.


WELL-POSITIONED

Tysabri, developed with Biogen Idec (BIIB.O: Quote, Profile, Research) , was withdrawn after a patient died from progressive multifocal leukoencephalopathy (PML). Two further cases of the rare brain and spinal-chord infection later emerged, one of them fatal.

Nevertheless, Elan (ELN.N: Quote, Profile, Research) said it was well-placed for a relaunch and that it planned to spend a further $150 million to $170 million in 2006 on developing and marketing the drug.

"If we get to about 20,000 patients, that will cover all the costs we are planning to spend on Tysabri," Elan's Cooke told reporters at a briefing in Dublin.

Elan's additional investment assumes a potential re-marketing in the United States in the second quarter of 2006 and a possible European launch in the second half of this year.

Elan shares, which slid from over 20 euros to 2.30 euros after Tysabri's suspension, were up 3.6 percent at 12.33 euros by 1421 GMT versus a 0.2 percent stronger Irish market .

Research chief Lars Ekman said he hoped to start Phase III trials on Elan's AAB-001 Alzheimer's drug, developed with Wyeth (WYE.N: Quote, Profile, Research) , this year.

"With all that data, it provides a platform for optimism," he said, adding that the advanced trials could be announced in the latter part of 2006 "plus or minus three months."

Cooke said Elan, which had over $1 billion in cash at the end of 2005 and about $2 billion in debt, hoped to cut its debt burden further this year by retiring about $250 million in convertible debt due in 2008.