Elan seeks to resume drug trials

ELAN will make another attempt at developing a treatment for Alzheimer’s disease a year after a previous drug had to be cancelled.

Elan, which is still emerging from an accounting scandal last year, has filed an application with the US Food and Drug Administration (FDA) to begin trials of a new treatment for the disease.

Last January, Elan had to cancel patient trials of a previous treatment, AN-192, which was found to be causing inflammation of the central nervous system. According to brokers yesterday, the new treatment is a reformulation of AN-192.

Elan said if the FDA had no comments to make on the application it would begin Phase 1 trials later this year with its development partner Wyeth for the drug which is targeted at those who have moderate Alzheimer’s.

Analysts believe an Alzheimer’s treatment has the potential to be a “blockbuster” drug, with sales of more than $1 billion a year.

The positive news on drug development will be a welcome boost after the company said in July that its potential treatment for Crohn’s disease - Antegren - did not have the expected outcome. The company said it was committed to bringing Antegren to the market. Elan reported a return to profitability yesterday, making net profits of $17.3 million for the second quarter of the year.

The company said second quarter revenues were down 46% on last year at $245.5 million but were up 7% when discontinued products were stripped out. The net profit, which equates to 5 cents per share, compares with a loss of $719m a year ago.

Chief Executive Kelly Martin said he is focused on improving the company’s financial situation and developing new treatments.

“Elan’s second quarter results are characterised by solid progress with our operating plan, including asset divestitures, cost reduction and debt reduction.”

Mr Martin added that Elan has almost $1 billion in cash left and further money could come in from the sale of several business units. The company has debt of over $2.3 billion, $1 billion of which must be paid this year.

Elan said that it had made significant headway on reducing its cost base and that its workforce was now down to 2,500 from 4,700 a year ago. Most of the workforce reduction was a result of the sale of several businesses in the past year.

Davy Stockbrokers analyst Jack Gorman said: “Detailed analysis of the underlying operations suggests that Elan remains on track in its recovery plan, and that the ongoing revenue base is intact and tracking a little better than expected.

“A return to substantial profitability will continue to be driven by prospective pipeline approvals.”