Elan returns to profit with €35m in third quarter

ELAN has updated its full-year guidance to allow for a forecast of adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) of $75 million (€50m), after it reported a switch from net loss to net profit for its third quarter.

The Dublin and Athlone-based drug-maker yesterday reported a net profit after tax, of $52.3m (€35m) for the three months to the end of September; a turnaround from a net loss of $83.5m for the same period last year. The result was aided by a $107.7m gain from selling a controlling stake in its Alzheimer’s product pipeline to J&J, which also recently completed the purchase of an 18.4% equity stake in Elan.

Adjusted EBITDA for the third quarter came in at $24m, up from a loss of $2m for the same three months last year. This turnaround was mainly due to a 12% reduction in operating expenses and a 6% year-on-year increase in overall revenue (to $287m), which in turn was helped by a good performance by Tysabri.

Global sales of the MS drug (which also treats Crohn’s Disease in the US) grew by 19%, on a year-on-year basis, in the three months in question, while patient number growth increased by 30% to 45,600 users.

Meanwhile, Elan’s quarterly operating loss was slashed year-on-year from $32m to just $2m and it now expects to see an operating profit in the current quarter. The full-year EBITDA forecast was significant in that a firm figure has now been mentioned (though the $75m is around 20% higher than certain analyst outlooks); Elan previously saying that it expected a positive result.

The company has also maintained its previous full-year revenue guidance of double digit growth. Net debt, during the quarter, was also slashed from $1.5bn to $600m.

Divisionally, third quarter revenue in Elan’s biopharmaceuticals business grew by 10%, while its drug manufacturing arm, Elan Drug Technologies (EDT), witnessed a 3% year-on-year revenue fall.

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Elan’s chief executive Kelly Martin said the latest quarterly results afforded the company the chance to develop Tysabri, EDT and its bioneurology pipeline.

The company’s share price was, however, down slightly by 9c in Dublin yesterday at €4.40.

With regard to the potential need to relabel health risks on Tysabri packaging — because of renewed concerns that the risk of chief side effect and rare brain disease, PML, could be accentuated with repeated use of the drug, Davy Stockbrokers analyst Jack Gorman said: “While we acknowledge the concerns regarding Tysabri growth prospects, the product has continued to grow despite all the PML-related noise that has intensified over the last three to six months. We do not have very aggressive growth projections in 2010/2011 for the product, so we believe concerns may be overstated.”