Good result helps Elan's plans to post first annual profit in a decade
Published 22/04/2010 | 05:00
Irish drug company Elan posted an operating profit of $32.7m (€24.4m) in the first quarter of its financial year, reversing a $54m (€40.3m) operating loss in the same period in 2009, even as sales of its Tysabri multiple sclerosis drug disappointed.
The firm said it remained on track to meet a target of reporting its first annual operating profit for the first time in a decade, however. Last year, the company recorded a net loss of $176.2m on top of a $71m net loss in 2008.
Elan recorded a 26.6pc rise in quarterly revenue to $310.5m in the three months to the end of March, driven by a better performance by its drug technologies unit and sales. A 53.1pc profit margin was also significantly better than expected by analysts.
But chief executive Kelly Martin admitted he was disappointed with the overall number of new patients signing up to use the Tysabri drug. "The first quarter was not where we wanted to be in terms of net new patients," he said. "Adding 140 to 150 patients a week isn't bad but when you look at the medical need we think it should be much higher than that."
Elan recorded sales of $198.8m from Tysabri during the first quarter of this financial year, a 25pc increase on the figure during the corresponding period last year. At the end of March, approximately 50,300 people around the world were using Tysabri, about half of them in the United States.
Doctors temporarily taking patients off the medicine may be hindering sales of the drug, said Mr Martin.
"Doctors are taking patients off the drug for a few months," he said. "We don't have visibility for how those numbers will pan out."
The growth in Tysabri sales for Elan missed the target of analyst Ian Hunter at Goodbody Stockbrokers, although overall sales at the firm were 2pc ahead of Mr Hunter's estimates. He described Elan's performance as "solid".
Shares in Elan closed up 10c, or nearly 1.9pc in Dublin yesterday, at €5.70.
Earlier this week the company announced that it was again exploring a possible spin-off of its Athlone-based drug technology division. A flotation of the unit could reflect an enterprise value of roughly $950m, according to Mr Hunter.
Elan incurred $2.1m in restructuring and severance charges during the first quarter of the year, while its research and development expenses fell 20pc to $64.8m from $80.5m. That was primarily as a result of the divestment of its Alzheimer's immunotherapy programme (AIP) last year to Johnson & Johnson. Excluding the AIP, R&D expenses rose 23pc to $12.2m. (Additional reporting by Bloomberg)