Elan hit by restructuring costs

Restructuring costs have resulted in Elan showing a net loss of $216.2m (€167m) for the third quarter of 2012 — a period which, last year, generated net income of $3.5m.

The loss figure was driven by costs linked with the hiving off of the group’s drug discovery division, Neotope Biosciences, and impairment charges connected with the ending of research into its failed Alzheimer’s treatment bapineuzumab. Impairments and restructuring costs for the period totalled $228.6m.

Despite this, Elan’s management said the quarter saw the company benefit from continued financial momentum. Revenues increased 10%, year-on-year, to $306.6m; and rose from $797.1m to $883m for the first nine months of the year.

Elan’s headline asset — multiple sclerosis treatment Tysabri — enjoyed a 3% annualised increase in net sales to just under $404m, with patient numbers rising by 13% in the three months.

On the back of that, management has reaffirmed full-year guidance of EBITDA of more than $200m.

The spinning off of Neotope will transform Elan into a profitable company. Speaking yesterday, Elan chief executive Kelly Martin again downplayed talk of that outcome turning Elan into a takeover target, by saying “any company generating profit will be an attractive target for bigger companies”.

“As the business transitions post the intended spin-off of Neotope, we will maintain our resolute focus on the current business by enabling growth of Tysabri, in terms of adding net new patients globally, appropriately advancing the ELNDOO5 molecule, and selectively exploring opportunities that would add to our value proposition in a balanced and thoughtful manner.”

He added that as Elan generates more cash in the coming years, management will look at ways of returning some to shareholders, as well as boosting earnings by the addition of some new “smart assets”. That could come about through bolt-on acquisitions of smaller companies or new treatments. Mr Martin said management would look at “anything and everything”.

Management also said that the recent refinancing of its debt — with an extended maturity date of 2019 — will see the company’s annual interest expense fall by around one third.