Elan's MS drug sales disappoint

LOWER COSTS and income from new drugs offset disappointing figures for sales of Tysabri for Biotech group Elan in the first quarter.

The company said more than 50,000 multiple sclerosis (MS) patients were now receiving treatment with Tysabri, but analysts said sales of the drug, at just under $200 million (€150 million), are about $20 million behind projections.

Overall group sales rose 27 per cent year-on-year to $311 million. The company reported a quarterly profit before tax of $10 million.

For the first time, both the drug technology and bioneurology businesses were profitable at the operating level.

Chief executive Kelly Martin also expanded on the company's announcement this week that it is considering splitting the group's bioneurology and drug technology units into separate listed entities.

"This is something we have discussed internally for seven or eight years," he said in a conference call. The drug technology business, run by chief financial officer Shane Cooke and charged with developing new ways to administer drugs, was a "fantastic growth business".

"We would like to add to it, add technology to it, and that takes investment dollars," said Mr Martin.

He said the company expected to spend the coming months talking to potential investors. While a stock market flotation is the chief executive's preferred option, Mr Martin said Elan would talk to any private equity or trade suitor who valued the business ahead of the likely flotation value.

Two years ago, the company considered an initial public offering (IPO) for the drugs technology unit before eventually conducting an auction with several private equity groups. The auction was abandoned as the credit squeeze hit.

"Our goal and objective is to do an IPO if at all possible," said Mr Martin in his clearest statement of intent yet.

Any money raised from a flotation would be used to deleverage some of the $1.6 billion in debt on the company's balance sheet.

Company president Carlos Paya acknowledged that sales of Tysabri had slowed in the first two months of the year, but pointed to accelerated patient additions - up to 190 a week - in March, bringing the average over the quarter to 149.

Elan also benefited from supplying initial stocks of Ampyra, a drug licensed by the company to Accorda, but manufactured at the drug technology unit in Athlone. Ampyra is the first drug taken orally that improves walking in MS patients. Elan booked revenue of $18.9 million on the drug.

Operating costs fell 15 per cent to $129 million, largely due to a 20 per cent decline in R&D spending attributable to the assumption of control on the most advanced elements of the Alzheimer's disease programme by Johnson & Johnson.

The company kept in place full-year guidance for earnings before interest, tax, depreciation and amortisation of more than $150 million, a move seen by analysts as indicating its confidence in accelerating sales of Tysabri as the year progresses.