Ireland’s Elan jumped 6% on the Irish stock exchange this morning after it posted better than expected losses and unveiled plans to cut costs following the market withdrawal of its multiple sclerosis drug Tysabri (natalizumab) in February [[01/03/05a]].
Although net loss per share jumped from $0.16 in the first three months of 2004 to $0.29, it still marginally beat analysts’ expectations, putting a rosier glow on the figures. However, this is likely to be cold comfort for a company that had expected a return to profitability on the back of Tysabri next year [[28/10/04c]].
Overall, revenues fell $45 million to $103 million, while net loss tumbled to $116 million from just $62 million for the first three months of last year.
Elan came close to collapse in 2002 after a series of accounting scandals took their toll [[08/02/02b]], but it clambered out of the quagmire with a renewed focus and targeted product pipeline [[10/06/02a]]. However, this all changed after a patient receiving Tysabri died from a rare brain infection, triggering Elan to suspend the product’s marketing and sparking a major 70% crash in its share price.
"After the voluntary suspension of Tysabri in February we took immediate actions which will reduce our operating cash burn by $100 million to about $250 million in 2005," Elan chief financial officer Shane Cooke said in a statement. It says it is working closely with the regulatory authorities and partner Biogen Idec to complete patient evaluations and develop an appropriate plan for Tysabri.
Excluding the impact of Tysabri, Elan hopes to break even on an EBITDA basis (earnings before interest, tax, depreciation and amortisation) this year. However, including Tysabri, it expects to record a negative EBITDA figure of $240 million-$260 million.
- Meanwhile, Biogen Idec – which partnered Tysabri – has reported first quarter revenues up 9% to $588 million. The figures were driven by sales of its multiple sclerosis drug Avonex (interferon beta-1a), which jumped 5% to $374 million, and co-promotion of the cancer drug Rituxan (rituximab) - up 20% to $160 million. Although the suspension of Tysabri had a negative $36 million impact, this was offset by reduced marketing and clinical trial expenses relating to the new MS drug. On a reported basis, Biogen Idec recorded a net income for the quarter of $43 million versus a loss of $41 million in the same three months of last year.