Elan set to deliver operating profit

IRISH BIOTECH group Elan expects to deliver an operating profit this year for the first time since 2001.

Rising sales of its blockbuster multiple sclerosis (MS) drug Tysabri alongside further cost-cutting are forecast to deliver a full-year operating profit in 2010 despite slowing revenue growth.

Chief financial officer Shane Cooke issued the new projections as the company reported a fourth-quarter operating profit of $36 million. The company’s biopharma division turned profitable on the basis of earnings before interest, taxation, depreciation and amortisation (Ebitda). while its drug technology business continued to make money.

For the year as a whole, the company recorded an operating loss of $10 million, down from $109 million in 2008. Revenues rose 11 per cent to $1.1 billion as the firm met or exceeded its forecasts.

Patient numbers and revenue from Tysabri increased 30 per cent over the year. Growth outside the United States was 40 per cent, with the US market returning half of that level.

Analysts expressed some concern about the number of patients added in the fourth quarter – 2,600 compared to 2,900 in the previous three months – as Elan and its US partner Biogen struggled to contend with a spike in the number of cases of the rare and dangerous progressive multifocal leukoencephalopathy (PML) emerging. The drug’s label was altered in consultation with regulators to indicate the increase in PML cases among patients on the drug for more than two years.

However, that has not deterred the companies from looking to expand into early stage MS.

Biogen has undertaken to update monthly through “medical channels” on the incidence and outcomes of patients with PML.

Elan’s drug technology business, which has been the driver of group revenue in recent years, is going through a transition, Mr Cooke said, as two ageing drugs are phased out of production and a number of new treatments on which the company will receive royalties take their place.

Mr Cooke was particularly bullish about the prospects for Ampyra, an Accorda drug approved for the treatment of mobility issues in MS patients.

Elan expects to further cut costs, in part because of the divestment of its leading Alzheimer’s programme to a new unit run by Johnson Johnson, which last year acquired an 18.4 per cent stake in the company.