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| Elan Reports 2001 Financial Results |
- Elan Product Revenue Increases to $1.4 Billion in 2001
- Elan Reports Earnings Per Share for the Fourth Quarter of 2001
Of 56 Cents (Before Other Charges)
- Elan Provides Earnings Guidance for 2002
DUBLIN, Ireland, Feb. 4 /PRNewswire-FirstCall/ -- Elan Corporation, plc
(NYSE: ELN) ("Elan") today announced net income for the fourth quarter of 2001
of $204.9 million and $0.56 per diluted share, excluding other charges,
compared to net income of $158.4 million and $0.45 per diluted share for the
fourth quarter of 2000, excluding other charges, representing increases of 29%
and 24%, respectively.
For full-year 2001, Elan reported record revenues of $1.9 billion, an
increase of 22% over 2000, with product revenue increasing by 35% to $1.4
billion in 2001, offset in part, by a 5% decrease in contract revenue to
$450.3 million. Net income increased to $696.5 million and $1.91 per diluted
share, excluding other charges, representing increases of 41% and 31%,
respectively.
Total revenue increased from $424.4 million in the fourth quarter of 2000
to $487.6 million in the fourth quarter of 2001, an increase of 15%,
reflecting an increase of 14% in product revenue to $350.7 million. Contract
revenue increased by 18% to $136.9 million in the fourth quarter of 2001,
reflecting mainly a risk sharing programme initiated with Autoimmune Research
Development Company to fund the clinical development in other indications of a
number of products including Antegren(TM). The gross margin on product revenue
was 72% in the fourth quarter of both 2001 and 2000.
US revenues for Zanaflex(TM), Skelaxin(TM), Maxipime(TM) and Abelcet(TM)
increased by 78%, 45%, 70% and 29%, to $162 million, $118 million, $86 million
and $82 million, respectively, for 2001 compared to 2000. Zonegran(TM) and
Myobloc(TM) revenues were $38 million and $11 million, respectively, for 2001.
Revenues for Zanaflex, Skelaxin and Maxipime increased by 218%, 61% and 112%,
to $38 million, $38 million and $29 million, respectively, for the fourth
quarter of 2001 compared to 2000 due to strong growth in prescription demand.
Abelcet revenue decreased by 8% to $19 million compared to the fourth quarter
of 2000. Zonegran and Myobloc revenues were $9 million and $3 million,
respectively, for the fourth quarter of 2001.
Commenting on the results, Donal J. Geaney, Elan's chairman and chief
executive officer said, "We made significant progress in our transition to a
fully integrated biopharmaceutical company during 2001. We have five products
which we envisage will each record gross revenues in excess of $100 million in
fiscal 2002. These products are Zanaflex, Skelaxin, Abelcet, Sonata(R) and
Maxipime. Zanaflex should become our first product to achieve revenue in
excess of $200 million for 2002. These, together with our other major US
products, Azactam(TM), Zonegran, Myobloc, the dermatology products and the
pain products (acquired from Boehringer Ingelheim), should result in strong
product revenue growth in 2002. It is expected that the growth in product
revenue from these ten products will be in excess of 50% for 2002 compared to
2001 and contribute approximately 60% of total product revenue for 2002.
Growth in total product revenue for 2002 is expected to be approximately 15%."
On December 19, 2001 Elan and American Home Products Corporation ("AHP")
announced a strategic alliance to develop and commercialise novel therapeutics
for the treatment of sleep disorders. Under the terms of the alliance, AHP
contributed the US marketing rights to Sonata. Elan contributed its
proprietary drug delivery technologies to develop new formulations of Sonata.
Elan is responsible for the marketing, sales and distribution of Sonata in the
US. AHP will continue to promote the original formulation of Sonata to
psychiatrists in the US."
Research and development expenses were $87.0 million for the fourth
quarter of 2001, compared to $76.2 million for the fourth quarter of 2000.
This reflects increased costs for Antegren, the Alzheimer's disease programmes
and costs for additional indications on some of Elan's marketed products.
Selling, general and administrative expenses increased by 12% to $151.8
million for the fourth quarter of 2001, reflecting the increased sales and
marketing infrastructure in the US and Europe.
Operating income for the fourth quarter of 2001 increased by 18% to $149.7
million compared to $126.6 million for the comparable quarter of 2000. Net
interest and other income increased by 83% to $59.4 million in the fourth
quarter of 2001 compared to $32.4 million in the comparable quarter of 2000,
mainly reflecting a gain of $31.5 million from the sale of approximately 20%
of Athena Diagnostics Inc. Athena Diagnostics has filed a registration
statement for an initial public offering in 2002.
Net income after taxes and before other charges for the fourth quarter of
2001 increased by 29% to $204.9 million compared to $158.4 million, in the
fourth quarter of 2000. This primarily reflects growth in revenue and
increased interest and other income, offset in part, by increased operating
expenses.
In the fourth quarter of 2001, Elan incurred a net charge of $196.4
million mainly for asset write-downs and rationalisation and integration
activities. The carrying values of Ceclor CD(TM) and Naprelan(TM) were
written-down by $84 million and $81 million, respectively, reflecting
impairments due to reduced revenues from these products. The integration,
rationalisation and severance charges primarily relate to the
biopharmaceuticals business.
Other charges for the quarter can be analysed as follows:
Item description US$m
Integration and rationalisation charges 16.1
Asset write-downs and other 177.2
Severance 3.1
Total 196.4
In 2000, Elan 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. In the first quarter of
2000, Elan recorded a charge of $344.0 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. Previously reported results for 2000
reflect the implementation of SAB 101.
Pipeline Update
Elan plans to launch Frova(TM) in April 2002 and expects to finalise a
co-promotion arrangement for this product during the first quarter. Elan is
undertaking a range of Phase IV clinical trials, certain of which will be used
to expand the approved label consistent with the marketing plans for the drug.
With respect to Prialt(TM), Elan has reached an agreement with the US Food
and Drug Administration ("FDA") through which this novel and important
compound may be introduced to the US market. To optimise the label Elan has
agreed to conduct one additional Phase III study which will be initiated in
the second quarter. The FDA has agreed that the drug may be made available to
patients for compassionate purposes. Elan has resolved all other pre-clinical
issues with the FDA and is committed to bringing this drug to market at the
earliest possible opportunity.
Elan has responded to the approvable letter received for its once daily
morphine product, Morphelan(TM), and anticipates approval and launch of this
drug later in 2002. Elan will co-promote this drug with Ligand
Pharmaceuticals Inc.. Morphelan will complement Elan's range of pain products
acquired in 2001 from Boehringer Ingelheim.
Elan in collaboration with its partner, Biogen Inc., initiated Phase III
clinical trials for Antegren in multiple sclerosis (MS) and Crohn's disease in
the fourth quarter. Twelve month safety and efficacy data will be available
in 2002 from the Phase II trials.
With respect to AN-1792, Elan and AHP are conducting an investigation into
the adverse events reported previously. The findings of this investigation
will be reported to the drug safety board for these trials, and reviewed with
regulatory authorities in the United States and Europe.
In January 2002, Elan entered into a 3-year extension to the research,
development and license agreement with Wyeth Ayerst Laboratories. This
extension is broader in scope and longer in duration than originally
contemplated in the original December 1999 agreement.
Both parties have agreed to increase their level of funding to this
collaboration. The collaboration has expanded to focus on multiple potential
products that would have utility in asthma, rheumatoid arthritis and MS as
well as autoimmune diseases. Elan has the option to co-promote these products
with Wyeth Ayerst in the US.
Product Rationalisation Programme and US Business Integration
Elan completed a product rationalisation programme in 2001 to reduce its
portfolio of marketed drugs to products which have the potential to achieve
revenues of $100 to $500 million each. Products which recorded full year
sales of $230 million in 2000 were rationalised through outright disposal of
smaller products and through distribution and royalty arrangements for
products with average sales of $5 to $20 million. Revenue from this activity
was $238 million in 2001. The products recorded revenue of $95 million prior
to rationalisation compared to $230 million in 2000. Elan may receive future
revenue of up to $100 million over the 2002-2004 timeframe. The contribution
to earnings in fiscal 2001 is estimated at 30-35 cents per share.
The rationalisation programme has helped to increase our cash, cash
equivalents and current marketable investments to approximately $2.4 billion.
This will be used to fund future product acquisitions with sales potential of
greater than $100 million. Elan initiated a very active product acquisition
programme in the first half of 2001. This resulted in the announcement of two
product alliances in the last four months of 2001, namely, the pain products
from Boehringer Ingelheim in September and Sonata from AHP in December. Elan
is currently in discussions with several companies for the acquisition of a
number of products that we expect to close during 2002.
Elan has largely completed the integration of its US biopharmaceuticals
businesses. This involved the transfer of all operational activities, with
the exception of research, from a number of US locations to San Diego and the
realignment of our sales forces to optimise revenues from our top ten
products.
Business Ventures
Elan has fifty five joint venture collaborations covering the development
of fifty three compounds. Of the total compounds under development, four are
in Phase III and thirty one are in Phase II/I. As of December 31, 2001 Elan
has invested $110 million in these joint ventures. In 2001, Elan expensed $32
million supporting these ventures and received revenue through reimbursement
of clinical and other services provided to these ventures of $15 million.
Guidance for 2002
Elan expects earnings for 2002 to be affected by slower than anticipated
growth in total revenue due to the later introduction of new products, the
revenue contribution in 2001 from the product rationalisation programme and
certain costs that will be incurred in 2002 required to position its
pharmaceutical business for future growth and complete its transition from a
drug delivery company to a biopharmaceutical company. These costs include:
-- incremental expenditure on research and development principally for
Phase III and Phase IV clinical trials in the amount of $50 million;
-- incremental sales and marketing expenditure in the amount of $100
million reflecting increases in its US and European sales forces and
related expenditure;
-- costs of establishing European infrastructure in the amount of $30
million;
-- reconfiguration of manufacturing facilities in Ireland for both Elan
and its partners products in the amount of $35 million; and
-- establishment of biologics capabilities in the amount of $10 million.
In this context, Elan anticipates that its revenue for 2002 will be in a
range of $2 to $2.1 billion (2001: $1.86 billion) of which product revenue
should account for $1.6 to $1.7 billion (2001: $1.41 billion). This
represents growth over 2001 in total revenue of 8% and in product revenue of
15%. Contract revenue is expected to range from $390 to $400 million in 2002.
Net income is expected to be $570 million to $610 million (2001: $696.5
million) or $1.55 to $1.65 (2001:$1.91) on a per share basis.
Elan has established a portfolio of ten key products which have the
potential to record US sales of between $100 and $500 million each. To
supplement this portfolio Elan intends to acquire additional products and
late-stage development molecules. Elan will utilise its portfolio of drug
delivery technology to provide product enhancements and manage the lifecycles
of these products. Elan has cash, cash equivalents and current marketable
investments of approximately $2.4 billion available to fund such purchases.
The successful implementation of these actions should allow Elan to resume
double-digit growth in revenue and earnings in 2003.
Elan is a leading worldwide fully integrated biopharmaceutical company
headquartered in Dublin, Ireland. Elan conducts its worldwide business,
including operations relating to research and development, manufacturing and
marketing, principally through wholly owned subsidiaries incorporated in
Ireland and the United States. 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 commercialisation of products using its extensive range of
proprietary drug delivery technologies. Elan shares trade on the New York,
London and Dublin Stock Exchanges.
This document and the attachments contain forward-looking statements about
Elan's financial results and estimates, business prospects and products under
development that involve substantial risks and uncertainties. You can
identify these statements by the fact that they use words such as
"anticipate," "estimate," "project," "envisage," "intend," "plan," "believe"
and others words and terms of similar meaning in connection with any
discussion of future operating or financial performance, including under
"Pipeline Update," "Guidance for 2002" and "Historic & Prospective Revenue
Analysis." Among the factors that could cause actual results to differ
materially from those described herein are the following: the success of
research and development activities and the speed with which regulatory
authorizations and product launches may be achieved; competitive developments
affecting Elan's current products; the ability to successfully market both new
and existing products domestically and internationally; difficulties or delays
in manufacturing; the ability to meet generic and branded competition after
the expiration of Elan's patents; trends toward managed care and health care
cost containment; possible legislation affecting pharmaceutical pricing;
exposure to product liability and other types of lawsuits; Elan's ability to
protect its intellectual property both domestically and internationally;
interest rate and foreign currency exchange rate fluctuations; governmental
laws and regulations affecting domestic and foreign operations, including tax
obligations; general changes in US and Irish generally accepted accounting
principles; growth in costs and expenses; changes in product mix; and the
impact of acquisitions, divestitures, restructurings, product withdrawals and
other unusual items. A further list and description of these risks,
uncertainties and other matters can be found in Elan's Annual Report on Form
20-F for the fiscal year ended December 31, 2000, and in its Reports of
Foreign Issuer on Form 6-K. Elan assumes no obligation to update any forward-
looking statements, whether as a result of new information, future events or
otherwise.
Elan Corporation, plc
Consolidated Income Statement Data
Three months ended Year ended
December 31, December 31,
2000 2001 2000 2001
US$m US$m US$m US$m
Revenues
308.6 350.7 Product revenues 1,046.5 1,412.2
115.8 136.9 Contract revenues 474.9 450.3
424.4 487.6 Total revenues 1,521.4 1,862.5
Costs and Expenses
76.2 87.0 Research & development 322.2 321.2
86.6 99.1 Cost of goods sold 321.3 379.5
135.0 151.8 Selling, general 512.1 603.4
& administrative
297.8 337.9 Total operating expenses 1,155.6 1,304.1
126.6 149.7 Total operating income 365.8 558.4
32.4 59.4 Interest and other 138.8 155.5
income (net)
159.0 209.1 Net income before tax 504.6 713.9
and other charges
(0.6) (4.2) Taxation (9.4) (17.4)
158.4 204.9 Net income before other charges 495.2 696.5
(104.4) (196.4) Other charges (445.7) (348.8)
-- -- Cumulative effect of (344.0) --
accounting change
54.0 8.5 Net income / (loss) (294.5) 347.7
321,559 341,269 Weighted average number of 312,880 335,990
ordinary shares outstanding
(in thousands)
$0.45 $0.56 Diluted earnings per ordinary $1.46 $1.91
share before other charges
$0.15 $0.02 Diluted earnings per ordinary $(0.94) $0.97
share after other charges
Elan Corporation, plc
Consolidated Balance Sheet
As at As at
December 31, December 31,
2000 2001
Assets US$m US$m
Current Assets
Cash and cash equivalents 802.5 1,662.7
Marketable investment securities 358.7 696.2
Other current assets 495.8 610.2
1,657.0 2,969.1
Intangible assets 1,999.9 2,140.9
Property, plant and equipment 353.5 401.0
Investments and marketable
investment securities 642.6 816.8
Total Assets 4,653.0 6,327.8
Liabilities and Shareholders' Equity
Shareholders' equity 2,276.9 3,275.7
Accounts payable and
accrued liabilities 867.5 1,063.1
4.75% exchangeable notes 324.7 --
7.25% senior notes due 2008 -- 650.0
3.25% zero coupon subordinated
exchangeable notes due 2018 921.3 951.4
Senior unsecured revolving
credit facility 2004 200.0 325.0
3.5% convertible subordinated
notes due 2002 62.6 62.6
Total Liabilities and
Shareholders' Equity 4,653.0 6,327.8
Elan Corporation, plc
Consolidated Statement of Cash Flows
As at As at
December 31, December 31,
2000 2001
US$m US$m
Cash flows from
operating activities 406.3 594.2
Cash flows from
investing activities (385.9) (818.1)
Cash flows from
financing activities (204.9) 1,084.1
Net cash movement (184.5) 860.2
Cash and cash equivalents
at beginning of year 987.0 802.5
Cash and cash equivalents
at end of year 802.5 1,662.7
Pro-Forma Financial Information Relating to Qualified Special Purpose
Entities ("QSPEs")
In the light of current market concerns relating to off-balance sheet
arrangements through QSPE structures, Elan has two QSPEs which it has not
consolidated in its financial results as presented under US generally accepted
accounting principles (these entities are consolidated in Elan's primary
financial statements which are prepared in accordance with Irish generally
accepted accounting principles). Elan has guaranteed the indebtedness of these
entities to the extent that the value of the investments held by the QSPEs are
insufficient to repay the indebtedness of these entities. If these entities
had been consolidated as of December 31, 2001 and 2000, the effect on net
income (as a reduction in net interest and other income), diluted earnings per
ordinary share after other charges, total assets, total indebtedness and
shareholders' equity would be as follows:
As of December 31, $ millions
As Reported Pro-Forma
2000 2001 2000 2001
Net income (294.5) 347.7 (333.4) 211.4
Diluted
earnings per
ordinary share
after other
charges ($0.94) $0.97 ($1.06) $0.59
Total assets 4,653.0 6,327.8 5,371.0 7,108.1
Total
indebtedness 1,508.6 1,989.0 2,308.6 2,989.0
Shareholders'
equity 2,276.9 3,275.7 2,192.9 3,046.7
As of December 31, 2001 the market value of investments held by the QSPEs
would have been sufficient to repay the indebtedness at that date.
Historic and prospective revenue analysis
Total revenue analysis (US$m) 2000A 2001A 2002E 2002E Change Change
Range '00-'01 '01-'02
Product Revenue
Top US products
CNS/Pain(1) 186 346 625 710 86% 93%
Hospital(2) 150 214 215 230 43% 4%
Dermatology 16 62 60 70 288% 5%
Sub-total 352 622 900 1,010 77% 54%
European products(3) 59 82 100 110 39% 28%
International and other 175 196 100 100 12% (49%)
Diagnostics 70 57 70 75 (19%) 27%
New product acquisitions -- -- 250 250 n/a n/a
Contract manufacturing
& royalties 160 122 115 125 (24%) (2%)
Sub-total 464 457 635 660 (2%) 42%
Product revenue before
rationalisation 816 1,079 1,535 1,670 32% 49%
Rationalisation program
Product revenue before
disposal/partnering 230 95 -- -- (59%) (100%)
Rationalisation revenue -- 238 25 20 n/a (91%)
230 333 25 20 45% (93%)
Product revenue 1,046 1,412 1,560 1,690 35% 15%
Contract revenue 475 450 390 400 (5%) (12%)
Total revenue 1,521 1,863 1,950 2,090 22% 8%
Ratio Analysis 2000A 2001A 2002E 2002
Range
Product revenue/Total revenue 69% 76% 80% 81%
Product revenue before
rationalisation/Product
revenue 78% 76% 98% 99%
Top US products/Product revenue 34% 44% 58% 60%
(1) Includes Zanaflex, Skelaxin, Pain portfolio, Zonegran, Myobloc and
Sonata.
(2) Includes Maxipime, Abelcet and Azactam.
(3) Includes Myocet revenue of $0.9 million and $0.5 million for the full
year and fourth quarter of 2001, respectively.
SOURCE Elan Corporation, plc
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CONTACT:
Investors - U.S. - Jack Howarth,
+1-212-407-5740, or +1-800-252-3526, or Investors - Europe - Emer
Reynolds, +353-1-709-4000, or +00800-28352600, or Media - Max
Gershenoff, +1-212-407-5740, or +1-800-252-3526, all of Elan
Corporation, plc
