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| Elan Reports Record 2000 Financial Results |
- Elan Product Revenue Increases to $1.05 Billion in 2000
- Elan Reports Earnings Per Share for the Fourth Quarter of 2000 of 45 Cents
- Elan Confirms Earnings Outlook for 2001
DUBLIN, Ireland, Jan. 29 /PRNewswire/ -- Elan Corporation, plc (NYSE: ELN)
("Elan") today announced record fourth quarter revenue of $424.4 million, net
income of $158.4 million and $0.45 per diluted share, excluding certain
charges discussed below, compared to revenue of $375 million, net income of
$115.3 million and $0.37 per diluted share for the fourth quarter of 1999,
representing increases of 13%, 37% and 22%, respectively.
For full-year 2000, Elan reported record revenues of $1.52 billion, an
increase of 16% over 1999 with product revenue increasing by 31% to
$1.05 billion in 2000 offset, in part, by a 8% decrease in contract revenue to
$474.9 million reflecting the termination of certain research and development
arrangements in December 1999. On a like-for-like basis, the underlying rate
of increase in total revenue for fiscal 2000 was 32%. Net income increased to
$495.2 million and $1.46 per diluted share reflecting, in part, the impact of
a merger and implementation of a change in accounting principle, representing
increases of 26% and 17%, respectively.
"For the first time in our history, product revenue exceeded $1 billion, a
remarkable achievement in the fourth year of our transition to a fully
integrated pharmaceutical company" said Donal J. Geaney, Elan's chairman and
chief executive officer. "We now have three products which we envisage will
each record revenues in excess of $100 million in fiscal 2001 -- Zanaflex(TM),
for spasticity; Skelaxin(TM), for muscular pain and Abelcet(TM), for fungal
infections.
"These, together with strongly growing products such as Maxipime(TM), an
anti-infective drug, and the expected contributions from the recently
introduced Zonegran(TM), an anti-epileptic and Myobloc(TM), for cervical
dystonia, together with the expected introductions of Frovelan(TM), for
migraine and ziconotide, for chronic severe pain, should see continued strong
growth in product revenue in 2001.
"Product revenue represented 73% of total revenue in the fourth quarter of
2000 and, for the first time, the gross margin on product revenue exceeded
70%, a significant improvement over prior periods. Fiscal 2000 was also a
robust year for product development activity. We entered into four
collaborations covering our major pipeline projects. These collaborations
which include two development programmes in the field of Alzheimer's disease
and the development of Antegren(TM) for multiple sclerosis and Crohn's disease
represent an endorsement of the quality of Elan's discovery expertise and its
scientific infrastructure.
"I am also pleased to report that Antegren, which is the subject of a
joint development agreement with Biogen Inc, will enter Phase III clinical
trials for multiple sclerosis and Crohn's disease in the second half of this
year. I believe that this product will represent a major advance for patients
who suffer from these chronic and debilitating conditions. For Elan and
Biogen, Antegren is potentially a major product opportunity and may have
applicability in the treatment of other auto- immune diseases.
"Our drug delivery division, Elan Pharmaceutical Technologies ("EPT"),
recorded a strong performance in 2000 with six products in registration or in
pre-launch phases and nineteen compounds in advanced clinical development for
a range of pharmaceutical partners. These products will contribute strongly
to future growth in royalty revenue over the next five years. In all, EPT
will have in excess of 40 compounds in clinical trials this year.
"In 2000, we made three significant acquisitions. In May, we acquired The
Liposome Company, Inc. ("Liposome") which provided our first entry into the
anti-cancer/anti-fungal therapeutic areas. This was followed in November with
our merger with Dura Pharmaceuticals, Inc. ("Dura") which enabled us to
greatly expand our sales and marketing infrastructure in the United States.
The merger gives Elan a presence in the important anti-infective, respiratory
and dermatology fields. Finally, in December, we completed the acquisition of
Quadrant Healthcare, plc ("Quadrant") a company specialising in the delivery
of proteins and peptides which will enable us to increase the range of
services and technologies that EPT can provide to its clients.
"Last year also saw a major re-organisation of Elan's senior management
with the appointment of new leadership to our pharmaceutical division and the
retirement of John Groom as president and chief operating officer. I would
like to thank John for his contribution to the growth of Elan since the
acquisition of Athena Neurosciences, Inc. in 1996 and welcome Daniel G. Welch
(president, Elan Pharmaceuticals); Lars Ekman, M.D., Ph.D. (president, global
research, Elan Pharmaceuticals); and Robert S. Whitehead (president, Americas,
Elan Pharmaceuticals) to the Elan organisation.
"Building on strong and impressive fourth quarter results, I am pleased to
confirm that we are comfortable with analyst consensus estimates of $1.89 for
2001 and look forward to strong growth in product revenue this year,"
Mr. Geaney concluded.
Product revenue in 2000 increased 31% to a record $1.05 billion compared
to $798 million for 1999, with the gross margin on product sales improving to
69% in 2000 compared to 68% in 1999. Product revenue in the fourth quarter of
2000 increased 29% to $308.6 million, compared to $239.6 million in the fourth
quarter of 1999. The gross margin on product revenue in the fourth quarter of
2000 was 72% compared to 67% in 1999.
Contract revenue in 2000 decreased by 8% to $474.9 million in 2000
compared to $514.5 million in 1999. However, contract revenue for 1999
included revenue of $184.3 million received from three research and
development arrangements (Axogen Limited, Neuralab Limited and Spiros
Development Corporation II, Inc.) ("Spiros"). In the first three quarters of
2000 revenue received from such arrangements was $37.9 million
(1999: $137 million). For the fourth quarter of 2000, revenue received from
these arrangements was nil (1999: $47.3 million). Adjusting for the
non-recurrence of this type of revenue the underlying rate of increase over
1999 in contract revenue was 31% and 32% for the fourth quarter and full-year
2000, respectively.
In the fourth quarter of 2000, Elan, in common with other biotechnology
companies, implemented the SEC's Staff Accounting Bulletin No. 101
("SAB 101"), which requires certain initial fees to be deferred and amortized
over future periods. As a result of the implementation of SAB 101, certain
initial fees recognized in prior periods have been deferred and are being
amortized over the terms of the relevant agreements. Fee revenue for the
first three quarters of 2000 also reflects the implementation of this change
of accounting principle. For the year 2000, Elan recorded a charge of
$344 million for the cumulative effect (i.e. for the period to
December 31, 1999) of this accounting change relating to fee income recognized
in prior years. Following the adoption of SAB 101, the amortisation of
deferred fee income has been included in the caption "contract revenue" as a
component of the research revenue received pursuant to such agreements or
arrangements.
Research and development expenses were $322.2 million in 2000, compared to
$289.4 million in 1999 due to a higher level of research activity offset, in
part, by a decline in clinical trial costs compared with 1999.
Selling, general and administrative expenses increased by 26% to
$512.1 million in 2000, reflecting increased marketing expenses, European
expansion, costs associated with the launches of Zonegran and Myobloc and an
increase in Elan's sales force to approximately 1,500 representatives by
December 31, 2000.
Operating income in the fourth quarter of 2000 increased 26% to
$126.6 million compared to $100.4 million in 1999, reflecting strong growth in
product revenue and the improved gross margin on product revenue. Operating
income for the full-year 2000 was $365.8 million reflecting the results for
the year, the impact of the Dura merger and the implementation of SAB 101.
Net income after taxes and before one-time charges in the fourth quarter
of 2000 increased 37% to $158.4 million compared to $115.3 million in 1999
reflecting growth in product revenue, an improved gross margin on product
revenue (72% in the fourth quarter of 2000 compared to 67% in 1999) and
satisfactory returns on cash invested. Net income after taxes and before
one-time charges for full-year 2000 increased 26% reflecting the impact of the
Dura merger and the implementation of SAB 101.
In the fourth quarter of 2000, Elan completed its merger with Dura. This
merger has been accounted for using the "pooling of interests" method and,
accordingly, prior periods have been adjusted to reflect the revenues, results
and assets and liabilities of Dura. Elan also completed the acquisition of
Quadrant in the fourth quarter which has been accounted for using the purchase
method.
The net effect of the Dura merger and the adoption of SAB 101 on the nine
months to September 30, 2000 was 16 cents per share and thereby reduced
reported earnings per share for that period from $1.17 to $1.01 per diluted
share.
Reflecting these acquisitions and related matters, a one-time charge has
been incurred in the quarter and the year, as follows:
Item Description Fourth
Quarter Year
2000 2000
(dollars, in millions)
Write-off of acquired in process research(1)
- Liposome -- 131.9
- Quadrant 26.2 26.2
- Spiros -- 87.9
Merger costs
- Dura (2) 35.5 35.5
Product withdrawal costs
- Dura (3) 35.6 35.6
Integration/rationalisation costs 7.1 128.6
104.4 445.7
(1) as required by SFAS No. 2, Accounting for Research and Development
Costs, for in-process research acquired in an acquisition accounted
for as a purchase.
(2) primarily investment banking fees, SEC registration costs and legal
and accounting fees.
(3) in November, the FDA requested that the pharmaceutical industry
voluntarily cease distribution and marketing of products containing
phenylpropanolamine ("PPA"). The company ceased shipment of such
products containing PPA and withdrew these products from customers
warehouses and retail shelves. The special charge of $35.6 million
provides primarily for product returns, the write-off of inventory and
a reduction in the carrying value of intangible assets.
Elan is a leading worldwide fully integrated pharmaceutical company
headquartered in Ireland, with its principal research, development,
manufacturing and marketing facilities located in Ireland, the United States
and Israel. Elan is focused on the discovery, development and marketing of
therapeutic products and services in neurology, pain management, oncology,
infectious disease and dermatology and on the development and
commercialization of products using its extensive range of proprietary drug
delivery technologies. Elan shares trade on the New York, London and Dublin
Stock Exchanges.
This communication includes certain "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995. These
statements are based on management's current expectations and are naturally
subject to uncertainty and changes in circumstances. Actual results may vary
materially from the expectations contained herein. The forward-looking
statements in this communication include statements about future operating
results. Certain factors, including Elan's inability to successfully
integrate the acquired companies, attain milestone payments, product
approvals, successfully launch and market its products and other economic,
competitive, business and/or regulatory factors affecting Elan's business
generally, could cause actual results to differ materially from those
described herein. More detailed information about these factors is set forth
in Elan's filings with the Securities and Exchange Commission, including
Elan's Annual Report on Form 20-F for the fiscal year ended December 31, 1999.
Elan is under no obligation to (and expressly disclaims any obligation to)
update or alter these forward-looking statements, whether as a result of new
information, future events or otherwise.
Elan Corporation, plc
Consolidated Statement of Income
Three months ended December 31, Twelve months ended December 31,
1999 2000 1999 2000
US$000s US$000s US$000s US$000s
Revenues
239,582 308,634 Product revenue 798,017 1,046,560
135,463 115,783 Contract revenue 514,530 474,859
375,045 424,417 Total revenues 1,312,547 1,521,419
Costs and Expenses
80,587 76,169 Research & development 289,412 322,192
79,421 86,599 Cost of goods sold 257,023 321,276
Selling, general &
114,644 135,048 administrative 406,005 512,128
274,652 297,816 Total operating expenses 952,440 1,155,596
100,393 126,601 Total operating income 360,107 365,823
Interest and
21,367 32,451 other income (net) 55,916 138,750
Net income before tax
121,760 159,052 and other charges 416,023 504,573
(6,509) (631) Taxation (24,042) (9,350)
Net income before
115,251 158,421 other charges 391,981 495,223
(88,610) (104,393) Other charges (88,610) (445,714)
Cumulative effect of
-- -- Accounting change -- (343,998)
Net income/(loss) after
26,641 54,028 other charges 303,371 (294,489)
Weighted average number of
ordinary shares outstanding
297,976 321,559 (in thousands) 296,258 312,880
Diluted earnings per
ordinary share before
other charges and
$0.37 $0.45 accounting change $1.25 $1.46
Diluted earnings per
ordinary share after
other charges and
$0.09 $0.15 accounting change $0.97 ($0.94)
Elan Corporation, plc
Consolidated Balance Sheet
As at As at
December 31, December 31,
1999 2000
Assets US$000s US$000s
Current Assets
Cash and marketable investment securities 1,249,064 1,161,233
Other current assets 401,329 495,738
1,650,393 1,656,971
Intangible assets 1,392,862 1,999,887
Property, plant and equipment 326,445 353,542
Investments and marketable
investment securities 502,019 642,600
Total Assets 3,871,719 4,653,000
Liabilities and Shareholders' Equity
Shareholders' equity 1,751,142 2,276,891
Accounts payable and accrued liabilities 616,031 1,067,475
4.75% exchangeable notes 325,000 324,725
3.25% zero coupon subordinated
exchangeable notes 892,046 921,273
3.5% convertible subordinated notes 287,500 62,636
Total Liabilities and Shareholders' Equity 3,871,719 4,653,000
Elan Corporation, plc
Selected Products - U.S. Totals
For the Year Ended December 31, 2000
2000 Percentage
Sales Increase/
US$'m (Decrease)
Zanaflex 91 132%
Skelaxin 82 49%
Abelcet 64 *
Permax(TM) 53 20%
Diagnostics 70 36%
Naprelan(TM) 42 -29%
Mysoline(TM) 23 5%
Maxipime 51 30%
Ceclor(TM) CD 40 -14%
Azactam(TM) 35 14%
Diastat(TM) 20 64%
Zonegran 13 **
* Abelcet was acquired in May 2000
** Zonegran was launched in June 2000
SOURCE Elan Corporation, plc
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