Third-quarter profit gives Elan shares a 4.5pc shot in the arm
Thursday October 22 2009
Shares in drugmaker Elan gained as much as 4.5pc in Dublin trading yesterday after the company reported a third-quarter profit and raised its full-year adjusted earnings forecast. The stock closed at €4.20, a 2pc gain. Elan, which is now part-owned by Johnson & Johnson (J&J), reported net income of $52.3m (€35m), compared with an $83.5m loss in the same period last year, and earnings of about $75m this year, higher than its previous target.
The sale of Elan's Alzheimer's drug portfolio to J&J reduced operating costs by about $32m, according to Jack Gorman of Davy Stockbrokers, Elan's broker. J&J, the world's largest maker of healthcare products, purchased an 18.4pc stake in the firm after amending a partnership agreement with Elan last month. The deal gave J&J rights to bapineuzumab, one of the most advanced Alzheimer's drugs in development.
"The transformational impact of the J&J transaction can again be seen," Mr Gorman wrote in a note to clients, adding that Elan's full-year adjusted earnings before interest, tax, depreciation and amortisation forecast is about 20pc higher than he had estimated.
The third quarter of 2009 proved to be a time of "significant transformation for Elan," said Kelly Martin, chief executive of Elan. "Completion of the Johnson & Johnson transaction and the subsequent refinancing of our balance sheet provide strategic flexibility and financial stability for the company.
"We are now afforded the opportunity to focus on growing Tysabri and EDT businesses, advancing our bioneurology pipeline and investing in unique science while having fundamentally reduced business risk across the enterprise."
Sales at Elan's biopharmaceuticals business, which makes up 76pc of turnover, grew by 10pc to $218m on strong sales of Tysabri, the multiple sclerosis treatment. This compensated for Elan's Azactam and Maxipime antibiotics, sales of which slid by 18pc and 68pc respectively. Elan Drug Technology, its development and manufacturing division which accounts for the rest of turnover, reported a 3pc fall to $71.2m.
Last year, Elan mooted plans to sell the division, although the deterioration in the credit markets led it to abandon the idea. Elan also reiterated its full-year 2009 guidance for double-digit percentage revenue growth. "They more than made up for that in the control of their R&D costs and general administrative costs," said Goodbody's Ian Hunter of the lower-than-forecast quarterly revenues. (Additional reporting Bloomberg)
- Ailish O'Hora
Irish Independent
