Irish biotech group Elan has reported higher than expected losses in the second quarter as generic competition emerged for one of its drugs earlier than expected.
The company reported a loss of $141.1 million (€102 million) for the three months to the end of June, compared with a $90.5 million loss in the period last year. A $52.2 million charge relating to the impact of the arrival on the market of a generic rival to Elan's Maxipime antibiotic was the primary reason for the loss.
Revenue increased 38 per cent to $188.5 million, driven by increasing sales of the multiple sclerosis drug Tysabri, which, after a year back on the market, is now used by 14,000 patients.
Losses before interest, tax, depreciation and amortisation narrowed to $31.2 million from $42 million a year ago.
Chief financial officer Shane Cooke said a generic rival to Maxipime that Elan had not expected on the market until early 2008 had started selling in June. He said the company would cut associated costs and still expected to meet end-year targets.
Tysabri is expected to break even in the current quarter. Elan said the drug's break-even point will come when it has 15,000 patients on therapy. At the middle of July, there were 14,000 using the drug, including those on clinical trials. "It is pretty impressive for any drug launch to get to that point this quickly," said Mr Cooke.
Elan's projected return to profitability has been put back. Chief executive Kelly Martin expects it to break even before interest, tax, depreciation and amortisation in the first half of 2008.
Elan rejected concerns that the number of MS patients in the US signing on for Tysabri therapy was falling, saying it was too early to determine a trend.
However, Mr Martin conceded the take-up in the US was slightly behind target, while European take-up was well ahead of expectations. Elan said 2,500 US neurologists account for about 70 per cent of the US patient population. To date, 1,800 doctors have signed up to the Tysabri programme in the US - although on average, each only has five patients taking the drug.
Elan said yesterday it was confident that patients' experience of the drug over six or seven months - in terms of efficacy and safety - would help increase numbers.
"The most powerful marketing tool for us is the drug itself," said Mr Martin, acknowledging that the need for Elan to relaunch the drug created complications that "should not be underestimated".
On Elan's Alzheimer's programme, Dr Lars Ekman, president of group R&D, said the company had taken some "very important decisions" in the second quarter on advancing the clinical trials process on several drugs.
Asked if Elan was concerned about "fast-track" status granted to an Alzheimer's therapy from Canadian rival Neurochem, Dr Ekman said no one drug would prevail in a major market where there are no "modifying drugs".
The US regulator will hold a review on Tuesday on the application of Tysabri in the US as a treatment for Crohn's disease. European authorities recently rejected a similar application, which Elan said it will appeal.
