Elan reports 24% rise in overall sales, driven largely by Tysabri revenue

ELAN, THE manufacturer of multiple sclerosis drug Tysabri, yesterday reported strong growth in sales last year but was more cautious in its outlook for 2009.

The company, which has hired Citigroup to conduct a strategic review, also said it was keeping its options open on that front – although chief executive Kelly Martin confirmed that the group’s current preference was for a sale of a minority stake to a global pharma group that would have the commercial infrastructure to help deliver Elan’s developing pipeline of drugs.

In the fourth quarter, Elan reported a 24 per cent rise in sales over the year-ago period to $270 million (€210 million), driven by a 68 per cent rise in revenue from Tysabri and a better-than-expected 14 per cent increase in turnover at the Elan Drug Technologies (EDT) division the company tried to offload last year.

Operating costs fell in the period despite the rise in sales and, with the benefit of an exceptional gain of $234 million, the company reported a profit after tax of $170 million for the last three months of 2008.

For the year as a whole, revenue jumped 32 per cent to $1 billion and earnings before interest tax, depreciation and amortisation (Ebitda) turned positive for the first time in seven years and ahead of its most recent guidance, reporting earnings of $4 million.

Despite the year-on-year rise in sales of Tysabri, revenue from the drug in the last three months of 2008 was lower than in the previous quarter. The company blamed the impact of adverse foreign exchange movements on sales outside the United States and fewer shipping days in the US.

Growth in Tysabri patient numbers slowed significantly in the second half of the year as five separate cases of brain disease progressive multifocal leukoencephalopathy (PML) emerged. Sales growth has been stronger outside the US throughout the year, particularly in the final quarter.

At the end of 2008, 37,100 people were on the therapy. Of those, 20,000 have been receiving treatment for over a year and 4,300 for more than two years.

The company acknowledged yesterday that it would not meet the long-stated target of 100,000 patients on therapy by the end of 2010, although it expects to hit that figure eventually.

For 2009, chief financial officer Shane Cooke said the company was targeting double-digit growth in revenue and gross margins of between 45 and 50 per cent.

It expects to have about $200 million in cash at year end. However, this is before allowing for the outcome of the current strategic review. Citigroup is due to report back to the company in about 10 weeks on its options.

Elan president Dr Carlos Paya said the company’s main focuses this year would be on advancing its Alzheimer’s programme and reinvigorating sales of Tysabri.