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| The movement of Elan's share price on the New York Stock Exchange in the year to July 25, 2007. |
Elan Corporation today announced its second quarter 2007 financial results.
Total revenue for the second quarter of 2007 increased 38% to $188.5 million from $136.4 million in the same period of 2006.
The net loss for the second quarter of 2007 increased to $141.1 million from $90.5 million in the second quarter of 2006 after including a non-cash charge of $52.2 million relating to Maxipime and Azactam intangible assets. This charge resulted from the approval by the United States Food and Drug Administration (FDA) of a generic form of Maxipime in June 2007, which was earlier than expected.
The net loss for the second quarter of 2007, before including the non-cash charge of $52.2 million and severance and restructuring costs primarily associated with the consolidation of Elan's activities on the west coast of the United States into one site based in South San Francisco of $14.9 million, was $74.0 million, a reduction of 18% from the net loss of $90.5 million recorded in the second quarter of 2006. Elan says that this improvement in underlying operating performance reflects a 38% increase in revenues and improved operating margins.
Revenue growth was driven by the launch of the multiple sclerosis drug Tysabri in the second half of 2006 and strong growth in manufacturing and royalty revenues, offset by reduced sales of Maxipime related to the approval of a generic form. The gross margin fell from 65% in the second quarter of 2006 to 56% in the second quarter of 2007, reflecting the impact of sales of Tysabri, which have a lower gross margin due to the collaboration agreement with US biotech firm Biogen Idec Inc. In addition, selling, general and administrative (SG&A) and research and development (R&D) costs in the second quarter of 2007 were held at approximately the same level as in the second quarter of 2006.
Commenting on Elan's business, Kelly Martin, Elan's president and chief executive officer, said, "We continue to make progress in our pipeline and focus on moving our science towards the patients. Business discipline and growth in both Tysabri and EDT should provide a solid platform for continued advancement throughout the balance of the year."
Commenting on Elan's second quarter financial results, Shane Cooke, Elan's executive vice president and chief financial officer, said, "We are very pleased with the progress we have made in the second quarter of the year with revenue growth of 38% and a reduction of two-thirds in Adjusted EBITDA losses as we continue to carefully manage our cost base. The net loss increased to $141.1 million, mainly due to a non-cash charge of $52.2 million related to the write down of intangible assets as a result of the approval of a generic competitor to Maxipime. Tysabri had a solid quarter with approximately 14,000 patients on therapy as of mid-July 2007, an increase of over 40% from when we reported last quarter. We expect Tysabri to continue to drive revenue growth."
Cooke added, "With the earlier than expected entry of generic competition to Maxipime, we will immediately adjust our commercial infrastructure, reducing related selling and administration costs, and we are targeting to contain Adjusted EBITDA losses for 2007 at the previously guided $50 million level."
