Sales growth helps Elan cut losses

Elan was upbeat yesterday about early take-up of its multiple sclerosis treatment Tysabri as the company reported reduced losses in the second quarter of 2006.

The Irish drug company has only recommenced dosing MS patients in the US with Tysabri in the past couple of weeks and chief financial officer Shane Cooke said it was too early to estimate the drug's sales potential. However, chief executive Kelly Martin did state that "in the first few weeks, we are pleased with what we see".

Elan saw losses in the second quarter of the year decline 37 per cent to $90.5 million (€70.6 million) from $142.6 million in the same period last year on the back of higher sales and sharply reduced debt management costs.

Sales jumped 15 per cent to $136.4 million from $118.6 million in the second three months of 2005 and the company continued to see improvements in profit margins, which rose to 64 per cent in the quarter.

Elan's interest bill fell to $27.2 million in the quarter compared to $34.7 million in the year ago period as a result of the early retirement of some of its debt. The figures were enhanced by the absence this year of the $52.2 million exceptional charge in the second quarter of 2005 relating to that early repayment of debt.

Overall, the loss per share fell to 21 cent compared with 35 cent in the comparable period.

"With all eyes focused on the performance of Tysabri now it is back on the market, these results reflect the solid progress the company is making on its core business and will support the current share price," Goodbody Stockbrokers analyst Dr Ian Hunter stated in a client note.

The company reiterated its expectations that full-year sales would exceed $500 million. Elan expects costs, including research and development expenses, to come in at the lower end of the $575-$625 million range, largely as a result of the slightly later than expected return of Tysabri to the market.

Mr Cooke said the company had started dosing patients in the US, Germany, Ireland, Britain and Sweden and expected costs associated with the drug to increase in the second half of the year.

"Our focus this year is on making Tysabri widely available to appropriate MS patients," he said, pointing out that, in the US, the company had only recently started in training and education programme for those administering the drug. "It will be towards the end of the year before we have patient targets."

Elan research director Dr Lars Ekman outlined progress on the companies other research programmes, particularly the closely watched Alzheimer's drug trials.

He said an interim analysis should be available some time in the second half of the year on the drug AAB-001, now called Bapineuzumab, which is in phase II trials.

Two other Alzheimer's drug are also progressing through earlier stages of the trials process.

Dr Ekman said Elan had submitted an application with European regulators for the use of Tysabri as a treatment of Crohn's disease and was in "active communication" with US regulators on an impending application there.