Elan to cuts costs after Tysabri debacle

Elan posted a slightly better-than-expected first-quarter loss today and said it aimed to reduce its cash outlays after suspending…

Elan posted a slightly better-than-expected first-quarter loss today and said it aimed to reduce its cash outlays after suspending its ill-fated Tysabri multiple sclerosis drug.

Elan said that its net loss almost doubled to $115 million in the first three months of this year from $62 million in the same period of 2004 - but still beat market forecasts.

"After the voluntary suspension of Tysabri in February we took immediate actions which will reduce our operating cash burn by $100 million to about $250 million in 2005," Elan chief financial officer Shane Cooke said.

The company, which had forecast a return to profitability sometime in 2006 on the back of Tysabri, after almost collapsing three years ago, had expected to spend between $160 million and $180 million this year on rolling out the drug.

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Shares in Elan have slid over 80 per cent since February 28th when the drug maker suspended sales of its new Tysabri MS treatment following the death of a patient from the rare brain infection progressive multifocal leukoencephalopathy.

Elan said that following Tysabri's suspension it now expected to make a negative earnings before interest, tax, depreciation and amortisation of $240 million to $260 million this year.