Elan losses almost double to $74.7m

Drug company Elan saw losses nearly double in the first quarter on the back of the suspension of its key multiple sclerosis treatment, Tysabri.

The drug on which the company had hoped to build its future accounted for the bulk of the company's operating losses of $74.7 million (€57.9 million). Elan also took a $14 million charge in respect of Tysabri inventories.

Overall, the group recorded a net loss of $115.6 million, or 29 cents a share, up from losses of $62.2 million or 16 cents a share ion the first quarter of 2004.

However, chief executive Kelly Martin said he was confident the drug could return to market.

In an interview following publication of the figures, he said: "If you look at the effectiveness of the drug and the unmet need from patients, I certainly believe this drug will eventually become available again."

He also said the company expected to break-even by the end of this year on the basis of earnings before interest, tax, depreciation and amortisation after taking steps to reduce spending.

Chief financial officer Shane Cooke said the company planned to reduce its "operating cash burn" by $100 million to about $250 million this year.

"A large part of our cost structure is based on Tysabri and, with its suspension, we can push out a lot of that activity," said Mr Martin.

Tysabri was withdrawn after two patients on a clinical trial developed a rare and generally fatal neurological condition called Progressive Multifocal Leukoencephalopathy (PML).

Elan and its US partner in the Tysabri programme, Biogen Idec, suspended sales of the drug as a treatment for multiple sclerosis (MS) just over a month after it had won approval from the US regulator, the Food and Drug Administration (FDA).

It also suspended ongoing clinical trials of the drug as a treatment for MS, Crohn's Disease and rheumatoid arthritis.

Elan and Biogen have undertaken a full review of patient data, a process they said yesterday they expect to complete by late summer. At that stage, they will discuss the findings with the FDA.

Mr Martin dismissed doubts about Elan's financial health, pointing to cash reserves of more than $1.35 billion after debt repayments during the quarter of $39 million.

He said that Elan had taken two-and-a-half years to ensure it had the wherewithal to survive cash issues that might arise.

"We have no concern regarding our 2008 debt obligations whatsoever," he said.

Elan said the supply difficulties, which held back sales of two other drugs during the three-month period, had been resolved and the company had "hot-wired" supplies for the rest of the year.

However, analysts said there was also concern about sales of Prialt, a recently approved strong painkiller. The company booked revenue of $1 million from Prialt, well below some analyst projections of $4 million.