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| Elan Reports Record First Quarter 2001 Financial Results |
Total Revenue up 27%
Product Revenue up 39%
Diluted Per Share Income Before Other Charges
of 41 Cents for the Quarter an Increase of 71%
DUBLIN, Ireland, April 23 /PRNewswire/ -- Elan Corporation, plc
(NYSE: ELN) ("Elan") today announced net income for the first quarter of 2001
of $144.4 million and $0.41 per diluted share, excluding other charges,
compared to net income of $76.5 million and $0.24 per diluted share, excluding
other charges, for the first quarter of 2000, representing increases of 89%
and 71%, respectively.
Revenue increased from $337.9 million in the first quarter of 2000 to
$429.3 million in the first quarter of 2001, an increase of 27%, reflecting an
increase of 39% in product revenue to $324.1 million. Contract revenue for
the first quarter of 2001 of $105.3 million was consistent with the level
achieved in the first quarter of 2000. Product revenue accounted for 75% of
total revenue in the first quarter of 2001 compared to 69% in the comparable
quarter of 2000. The gross margin on product revenue improved to 72% in the
first quarter of 2001 compared to 68% in the comparable quarter of 2000.
Commenting on the results, Donal J. Geaney, Elan's chairman and chief
executive officer said, "I am pleased with the performance of the business in
the first quarter of 2001. The significant growth in product revenue and the
expansion in the gross margin reflect the continuing transformation of the
company to a fully integrated pharmaceutical company. The three largest
products -- Zanaflex(TM), for spasticity, Skelaxin(TM), for muscular pain and
Abelcet(TM), for fungal infections, all performed in line with our
expectations for the first quarter of 2001 and we remain confident in our
expectation of recording revenue in excess of $100 million for each product in
fiscal 2001.
"I am also pleased to report that we have made considerable progress in
integrating our North American pharmaceutical business following the merger
with Dura Pharmaceuticals, Inc. ('Dura') in the fourth quarter of 2000.
During the first quarter of 2001, we announced the new management structure
for the business, realigned the sales force into four business units focused
on primary care, acute care, neurology and specialty areas, and commenced the
implementation of our integration plan which we expect to generate $50 million
in full-year operating expense synergies. The reorganisation of our sales
force will allow the business to focus its marketing efforts on the key growth
products.
"Myobloc(TM), our botulinum toxin type B, for the treatment of cervical
dystonia, was launched late in the fourth quarter of 2000 in the US, and early
in the first quarter of 2001 in several key European markets under the name
NeuroBloc(TM). We believe that the product is on target to meet our
expectations for 2001. In addition, Zonegran(TM), our anti-epileptic
introduced in 2000, showed strong prescription growth in the first quarter of
the year and we also expect this product to meet our expectations for 2001.
"We have made significant progress in our clinical development efforts
during the quarter. In January, Elan and our partner Biogen, Inc. announced
positive results in two large Phase II clinical studies with Antegren(TM)
(natalizumab) in multiple sclerosis and Crohn's disease. We anticipate that
Phase III studies in both indications will be initiated in 2001. We also
continued to progress our Alzheimer's disease candidate (AN-1792), which is
being developed in collaboration with American Home Products Corporation,
through Phase I clinical development.
"Finally, following the repayment in cash of approximately $224.9 million
of the 3.5% convertible subordinated notes in December 2000, and the
conversion of approximately $324.7 million of the 4.75% exchangeable notes in
March 2001, we strengthened our cash resources through the issuance of
$650 million in seven year 7.25% senior guaranteed unsecured notes during the
quarter," Mr. Geaney concluded.
Research and development expenses were $74.0 million in the first quarter
of 2001, compared to $86.0 million in the first quarter of 2000. The
reduction reflects lower clinical trial costs and lower expenditure on
programmes previously funded by Dura, the costs of which were offset by
research revenue. Selling, general and administrative expenses increased by
26% to $149.9 million in the first quarter of 2001, reflecting the
consolidation of The Liposome Company, Inc. (acquired in May 2000), the
acquisition of certain dermatology products in the fourth quarter of 2000, and
increased marketing expenses associated with Zonegran and Myobloc, which were
launched in the second quarter of 2000 and at the end of the fourth quarter of
2000, respectively.
Operating income in the first quarter of 2001 increased 94% to
$116.2 million compared to $59.8 million in 2000, reflecting strong revenue
growth, the improved gross margin on product revenue and lower research and
development expenses.
Net income after taxes and before other charges in the first quarter of
2001 increased 89% to $144.4 million compared to $76.5 million in the first
quarter of 2000, reflecting growth in product revenue and the improved gross
margin on product revenue.
In the first quarter of 2001, Elan incurred a non-recurring charge of
$68.0 million following the completion of its merger with Dura in 2000. This
merger was 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.
Primarily reflecting this merger and related matters the non-recurring
charge for the quarter can be analysed as follows:
Item description (dollars, in millions)
Integration and rationalisation charges 32.9
Asset write-off and other 17.9
Severance 17.2
Total 68.0
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 the
first quarter of 2000 now reflect the implementation of SAB 101.
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 but actual results
may vary materially due to various factors. 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, develop products, gain approvals, 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 March 31,
Revenue 2000 2001
US$000s US$000s
Product revenue 232,399 324,087
Contract revenue 105,488 105,258
Total revenue 337,887 429,345
Costs and Expenses
Research & development 86,036 74,002
Cost of goods sold 73,306 89,202
Selling, general & administrative 118,764 149,923
Total operating expenses 278,106 313,127
Total operating income 59,781 116,218
Interest and other income (net) 19,221 31,516
Net income before tax and other charges 79,002 147,734
Taxation (2,515) (3,328)
Net income before other charges 76,487 144,406
Other charges -- (68,010)
Cumulative effect of accounting change (343,998) --
Net (loss)/income after other charges (267,511) 76,396
Weighted average number of ordinary
shares outstanding (in thousands) 299,066 327,608
Diluted earnings per ordinary share before
other charges and accounting change $0.24 $0.41
Diluted earnings per ordinary share after
other charges and accounting change ($0.89) $0.22
Elan Corporation, plc
Consolidated Balance Sheet
As at As at
December 31, March 31,
2000 2001
Assets $000s $000s
Current Assets
Cash and marketable investment securities 1,161,233 1,573,916
Other current assets 495,738 504,428
1,656,971 2,078,344
Intangible assets 1,999,887 2,003,287
Property, plant and equipment 353,542 356,376
Investments and marketable
investment securities 642,600 781,871
Total Assets 4,653,000 5,219,878
Liabilities and Shareholders' Equity
Shareholders' Equity 2,276,891 2,693,279
Accounts payable and accrued liabilities 1,067,475 885,216
4.75% exchangeable notes 324,725 --
7.25% senior notes -- 650,000
3.25% zero coupon subordinated
exchangeable notes 921,273 928,747
3.5% convertible subordinated notes 62,636 62,636
Total Liabilities and Shareholders' Equity 4,653,000 5,219,878
SOURCE Elan Corporation, plc
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or 800-252-3526, or European investors, Emer Reynolds,
+353-1-709-4000, or +00800-28352600, or media, Max Gershenoff,
212-407-5740, or 800-252-3526, all of Elan Corporation
