Third-quarter losses at Elan Corp have narrowed as the Irish drugmaker has abandoned plans to sell off its drug delivery unit.

A sale of Elan Drug Technologies had been touted for months, a move which analysts felt would have brought in around $1.4 billion, and “a number of parties expressed considerable interest” in the unit. However, Elan says that “given the recent dislocation and uncertainty in the financial and credit markets”, it has decided to retain the EDT business “for the foreseeable future”.

The Dublin-headquartered firm also noted that it intends to put in place “structures to allow EDT to develop and grow as an independent wholly owned subsidiary of Elan". Third-quarter revenues were up 3% to $71.2 million.

As for the rest of the financials, net loss decreased 4% to $83.5 million, while total revenues rose 53% to $270.1 million, driven by the multiple sclerosis and Crohn’s disease drug Tysabri (natalizumab). Sales of the treatment, which is partnered with Biogen Idec, shot up 154% to $237 million.

By the end of September there were 35,500 patients using Tysabri worldwide and in the third quarter 3,700 new patients were added, a 23% rise on the like, year-earlier period. However this was down from 5,700 in the second quarter, which the company said was due to the reports of two European patients treated with Tysabri who developed the potentially fatal brain infection progressive multifocal leukoencephalopathy earlier this year.

As for Elan’s other products, sales of the antibiotic Maxipime (cefepime) suffered a 70% decline to $5.7 million as a result of generic competition, though Azactam (aztreonam), another antibiotic, rose 17% to $24.2 million. The firm said that although Azactam lost patent protection in October 2005, no copycat version has been approved yet.

Chief executive Kelly Martin said the reaction to mixed Phase II data for its much-touted Alzheimer’s disase drug partnered with Wyeth, bapineuzumab, and the two PML cases “have contributed to increased volatility in our equity value and a change in the risk perception of Elan within the marketplace”. However, “sharing relevant medical information” with regulatory agencies, physicians and patients should get the message across about the value of Elan’s drugs and “allow volatility of our equity to reduce over time”.

The company said it was on track to record 2008 revenues approaching $1 billion and adjusted earnings before interest, tax, depreciation and amortisation loss of less than $50 million. However the results failed to impress Irish stockbroker Goodbody.

Analyst Ian Hunter issued a research note saying that in the medium-term, with projected cash flows not sufficient to cover the $1.1 billion in debt due in late 2011, Elan will have to either sell an asset such as EDT, issue equity or refinance the debt. He also noted that the revenue rise, while above consensus forecasts, “still represent a 30% dip from those we were forecasting prior to the announcement of the two cases of PML.