Elan looks to future despite results

LOSSES at Elan exceeded revenues in the three months to September the company revealed yesterday, but executives are confident of a return to profit in 2006.

Elan’s revenues in the three months ended September 30 came to €101.1 million (2003 €131.2m) while net losses for the same period came to €107.8m (2003 €87m).

Analysts expected the losses to be worse but an unexpected fall in R&D expenditure of $55.5m was well below the anticipated spend of $75m (2003 $66.9m). Operating expenses fell 4.8% to $223m compared to last year but chief executive Kelly Martin said after two-and-a-half years of slashing costs they were likely to begin rising again ahead of the launch of new drugs.

“The cost structure will trend up from here”, he said in an interview, adding that any increases would be tied to the launch of multiple sclerosis drug Antegren and painkiller Prialt whose success will be key to Elan’s future.

Chief financial officer Shane Cook said in a statement accompanying the results:

“We continued to report net losses this quarter as we resolve outstanding legacy issues, streamline the balance sheet and, most importantly, invest for a successful launch of Antegren and Prialt.

“We are optimistic the dedication, commitment and financial resources we have invested in these products will be reflected in a return to profitability in the 2006 timeframe,” he said.

Goodbody analyst Ian Hunter noted that Elan reported cash of $680m at September 30, debt was $1.5bn, leaving net debt of $819.7m.

“Adding the recent cash generated from the sale of Warner Chilcott shares ($101.8m) gives a pro-forma cash balance of $781.8m. Cash payments due within one year amount to $418.4m ex-operational cash burn,” he said.

Elan shares, which slid below €2 in 2002 amid worries over its accounts following an article in The Wall Street Journal, closed up 3.15% at €20.28 in Dublin yesterday. Elan also said its focus was on preparing for a successful launch of Antegren. Having jointly developed Antegren with US firm Biogen Idec, Elan is awaiting US regulatory approval for the multiple sclerosis (MS) treatment after it was fast-tracked.

Asked about the speed of the process and the consequent lack of full MS trials data, chief executive Ms Martin said the firm would work to educate patients and doctors about the drug so they would be confident about using it.

Additional reporting Reuters and Bloomberg.