Elan aims to be in profit by 2006

DRUG firm Elan has seen its losses narrow and expects to be profitable next year following the release of treatment for multiple sclerosis.

The company, which was on the brink of bankruptcy three years ago, said losses for 2004 had fallen to $395 million from $500m the previous year.

Elan said its finances were helped by the sale of a number of businesses in 2004 and from lower costs.

It also raised the prospect of returning to profitability next year as revenues and profits from the multiple sclerosis treatment Tysabri began to flow in.

The company was forced into a major restructuring after the exit of former chief executive Dónal Geaney.

This included the sale of a number of businesses and a refinancing of its balance sheet.

Elan said yesterday the recovery was complete and it was now looking for a boost to sales from the Tysabri treatment.

"The initial take-up since the launch of Tysabri is exceeding all our expectations and we remain optimistic that we will return to profitability by the end of 2006," chief executive Kelly Martin said.

The company said sales of Tysabri were $6.4m in the three months to end December.

However, this figure undermines the success of the drug as only a couple of thousand of sufferers have received the treatment, which was only launched in late November.

According to analysts the treatment has the potential to be the saviour for Elan.

Davy Stockbrokers said the drug can generate revenues of $288m in 2005, requiring, at a very rough estimate, about 25,000 patients to be on the drug by the end of the year.

It said the company could have a gross profit margin of up to 35% on Tysabri.

Total turnover for the year dropped from $685m in 2003 to $481m, again due to the sell-off of a number of products.

The company indicated that it now expected revenues to pick up, helped by the launch of new products.

Elan are working on developing a number of other drugs this year. It plans to launch a new pain killer, called Prialt, which is much stronger than morphine.

And it is still seeking a treatment for Alzheimer's disease.

The company also released results for the final three months of 2004 yesterday.

These showed the loss per share reduced to $0.22 from $0.82, compared with a forecast of a $0.26 loss. Revenues were down just 10% to $123.8m.

Elan shares, which have quadrupled in just over a year, fell by 1% to €21.83 on the Irish stock market.