Elan receives FDA approval for key drug

There was good news on the drug front for Elan yesterday as it received approval from the US Food and Drug Administration (FDA) for a new version of a key drug.

The pharmaceutical company said the FDA had approved a stronger dosage of Skelaxin, used in the treatment of pain relief associated with musculoskeletal conditions. The approval could help Elan stave off competition from rival drug-makers.

A key drug, accounting for sales of $118 million (€118.8 million) or nearly 8 per cent of total revenues last year, Skelaxin was expected to face generic competition next year.

"It provides more distance between it and generic versions," said Mr Jack Gorman, analyst with Davy Stockbrokers. He had been expecting Skelaxin sales to fall, from a forecast $154 million this year to $80 million next year, with the arrival of generic competition.

But the new formulation, allied to the issuing of a new patent for Skelaxin in June, could delay the arrival of competitors in the market. Elan also said it had received approval for a capsule form of its spasticity drug, Zanaflex.

While the Skelaxin approval was welcome news, analysts said the approval of the new Zanaflex formulation had probably come too late to protect sales of the drug from competition.

"If it offers any respite at all, it will be modest," said Mr Gorman.

Elan was taken by surprise earlier this year when the FDA approved a rival version of Zanaflex some six to nine months ahead of expectations. A number of rival products are already on the market and expected to hit Zanaflex sales this year.

In Dublin, Elan shares closed 20 cents lower at €2.80 in a generally weaker market, while in New York, where they are mainly traded, they finished down 10 cents, or 3.52 per cent, at $2.74.

Analysts said the news on the two drugs was modestly positive for the company but small in the overall context. "The market is not focused on revenue or earnings growth. It's a secondary issue at the moment," one analyst said.