Elan confident of meeting recovery plan deadline

Embattled pharmaceutical group Elan is confident of completing its recovery plan on time, chief executive Mr Kelly Martin said yesterday.

Speaking after the release of first-quarter figures showing a net loss of $130.2 million (€118.8 million) or 37 US cents per share, he said there would be further announcements about disposals in the next eight to 10 weeks.

And he was bullish about the prospects for the sale of Sonata and Skelaxin, regardless of the outcome of litigation with King Pharmaceuticals, which had agreed to pay $850 million for the drugs. "These drugs were quite attractive last year when they first went on sale and there is no reason to assume they would not be again," he said.

However, he stressed that completion of the deal with King was still the preferred option, not least because of the time constraints on an alternative.

Elan faces repayments of close to $1.3 billion by the end of this year and currently has cash of less than $1 billion.

Yesterday's figures show that revenue fell 42 per cent to $260 million in the first quarter compared to the same period a year ago. However, sales of retained products - with the exception of Zanaflex, which has seen sales tumble since generic rivals come on the market last year - rose 43 per cent.

Operating costs also fell as staff numbers were reduced by 1,550 since last July. There was a 29 per cent decline in selling, general and administrative expenses to $127 million over the year-ago period. The company said operating expenses would continue to fall for the rest of the year.

Elan took a $29 million charge related to its restructuring, but said that capital expenditure and restructuring-related charges for the rest of the year should be limited to $120 million, down from a previous estimate of $170 million.

Commenting on its drugs pipeline, the company said it expected results from phase III trials of Antegren for Crohn's disease by August and hopes to file an application with the US Food and Drugs Administration (FDA) for approval by year-end. Results on Antegren trials for MS sufferers are expected early next year.

It also expects to file an application for its pain management treatment Prialt by year-end. Mr Martin was particularly bullish about the prospects for Prialt. "I think this is one of the sleeper jewels in the company," he said. "It has no other competition and we are making good progress."

Mr Martin, the former Merrill Lynch banker, who was presenting his first set of results since joining Elan, said he was now more confident of its ability to recover from its recent troubles.

He said the company was determined to be in a break-even position before the launch of new drugs and hoped the company's restructuring would be complete with 18 months.

Analysts were mixed in reaction to the figures, with most awaiting the outcome of the King Pharmaceuticals action, which comes before the courts in a fortnight and news of other disposals before deciding whether Elan was properly on the road to recovery.