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| Elan Reports First Quarter 2002 Financial Results |
Product highlights
* Product revenue from Elan's top 10 U.S. product lines increased by 70%.
* Product revenue earned from Elan's product rationalisation programme in
2001 was successfully replaced by growth in Elan's top 10 U.S. product
lines.
* Zanaflex revenues were $53.7 million, an increase of 53% versus the
first quarter of 2001. Strong Zanaflex total prescription growth of
84% in the first quarter of 2002 compared with the first quarter of
2001.
* Skelaxin revenues were $33.5 million, an increase of 80% versus the
first quarter of 2001. Skelaxin total prescription growth of 29% in the
first quarter of 2002 compared with the first quarter of 2001.
* Maxipime revenues were $17.2 million, an increase of 24% versus the
first quarter of 2001. Audited sales volumes for the 3 months ended
February 2002 were 36% higher than the prior year.
* Abelcet revenues were $23.4 million, an increase of 16% versus the first
quarter of 2001. Audited sales volumes(1) for the 3 months ended
February 2002 were 9% higher than the comparable period in the prior
year.
* Zonegran revenues were $10.4 million, an increase of 51% versus the
first quarter of 2001. Zonegran total prescription growth of 204% in
the first quarter of 2002 compared with the first quarter of 2001.
* Sonata has been successfully relaunched, following its acquisition from
Wyeth and achieved revenues of $23.5 million for the quarter. Total
prescriptions for Sonata in the first quarter of 2002 were 5% lower than
in the first quarter of 2001.
Business highlights
* FDA approval of Avinza, Elan's once daily formulation of morphine,
licensed to Ligand for marketing in the U.S. and Canada.
* Partnering of Frova with UCB for its launch and commercialisation in the
second quarter of 2002.
* Substantial progress on the implementation of Elan's product enhancement
strategies for both Zanaflex and Skelaxin.
* Presentation of the 6-month and 12-month Phase IIb results for Antegren
in Multiple Sclerosis ("MS") at the American Academy of Neurology
conference in Denver and the advancement of Phase III studies with our
partner, Biogen, in MS and Crohn's Disease.
* Significant progress in our Alzheimer's programmes with Wyeth and
Pharmacia and in our own internal programme.
* Significant progress of our business ventures, both in terms of
advancing clinical development programmes and the business ventures
securing additional financing.
* Formulation and definition of Elan's 2002 action plan.
2002 action plan
* Streamline the business focusing investment on those products and
projects that demonstrate the best return.
* Reduce complexity of balance sheet while maximising financial
flexibility and liquidity.
* Acquisition of in-market products and development molecules in key
therapeutic areas tempered by target to maximise financial flexibility
and liquidity.
* Continued focused investment in R&D activities.
Introduction
DUBLIN, Ireland, May 2 /PRNewswire-FirstCall/ --
Elan Corporation, plc (NYSE: ELN) ("Elan") today announced diluted earnings
per share of $0.22 excluding the effects of losses on certain investments in
the amount of $17.7 million, or $0.05 per diluted share, and excluding other
charges, compared to $0.41 for the first quarter of 2001, before other
charges. Including the losses on certain investments, Elan reported diluted
earnings per share of $0.17 for the first quarter of 2002, before other
charges. Operating income for the quarter is consistent with guidance given
by Elan in February 2002. Earnings guidance for fiscal 2002 anticipated that
the contribution to earnings per share from interest and other income would be
approximately $0.45-$0.50. On a quarterly basis, this income will fluctuate
depending on the timing of investment realisations and disposals. Guidance for
the year also anticipated a contribution from product acquisitions for fiscal
2002 of approximately $0.25 per share. There were no product acquisitions in
the quarter.
Commenting on the results, Donal J. Geaney, Elan's chairman and chief
executive officer said: "I am very pleased that we have met our challenging
goals for the first quarter. Our speciality pharmaceutical business performed
particularly strongly with all of our key products growing significantly over
their 2001 levels. In particular, Zonegran is now the fastest growing product
in the adjunctive epilepsy drug category and we have successfully relaunched
Sonata following the establishment of our alliance with Wyeth. In the
quarter, our top 10 products in the U.S. were 62% of total product revenue
compared to 37% in the first quarter of last year, reflecting the success of
our integration and rationalisation programmes. We are very focused on the
recovery of shareholder value and have set out our plans later in this press
release."
Revenue
Total revenue increased to $443.6 million in the first quarter of 2002
from $429.3 million in the first quarter of 2001. Product revenue in the
first quarter of 2002 was $330.4 million compared to $324.1 million in the
first quarter of 2001. Excluding revenue from the product rationalisation
programme, product revenue increased by 35% to $317.4 million in the first
quarter of 2002 compared to $235.3 million in the first quarter of 2001.
Product revenues from Elan's top 10 U.S. product lines, as set out in the
attached revenue analysis, increased by 70% to $203.6 million in the first
quarter of 2002 compared to $119.8 million in the first quarter of 2001.
Excluding acquisitions (i.e. Sonata and the Roxane pain portfolio), Elan's
U.S. promoted products increased by 39% in the first quarter of 2002 over the
first quarter of 2001. Elan's top 10 U.S. product lines accounted for 62% of
total product revenue in the first quarter of 2002 compared to 37% in the
first quarter of 2001 reflecting the acquisition of Sonata and the Roxane pain
portfolio, the significant growth of Elan's core business and the successful
execution of the U.S. business integration and sales force realignment in
2001.
In the first quarter of 2002, Zanaflex, Skelaxin, Maxipime, Abelcet and
Zonegran each experienced continuing strong prescription growth resulting in
U.S. product sales increases of 53%, 80%, 24%, 16% and 51%, respectively over
the first quarter of 2001, to $53.7 million, $33.5 million, $17.2 million,
$23.4 million and $10.4 million, respectively. Myobloc/Neurobloc global
product sales were $3.2 million in the first quarter of 2002 compared to
$2.8 million in the first quarter of 2001. Product sales from Sonata and the
Roxane pain portfolio were $23.5 million and $13.9 million, respectively, for
the first quarter of 2002. These products were acquired in the second half of
2001 and therefore had no reported sales in the first quarter of 2001.
Total product revenue includes international and other product revenue,
which principally comprises co-marketing revenues receivable pursuant to the
disposal of royalty rights on certain products, revenue from non-marketed
legacy products and sales by Elan's affiliates in Asia. The net co-marketing
revenues amounted to $41.0 million in the first quarter of 2002, compared to
$35.5 million in the first quarter of 2001. This included $23.8 million from
Autoimmune Disease Research and Development Company ("ADRC") in the first
quarter of 2002. Co-marketing revenues receivable are fully offset by costs
included in operating expenses. No margin is earned on these revenues.
Contract Revenue
Contract revenue in the first quarter of 2002 was $113.2 million compared
to $105.2 million in the first quarter of 2001. The amortisation of license
fees by our drug delivery and biopharmaceutical businesses amounted to
$68.0 million in the first quarter of 2002 compared to $64.7 in the first
quarter of 2001. Of the $68.0 million in amortised license fees in the first
quarter of 2002, $47.3 million relates to the amortisation of licence fees
earned from our business ventures. Research revenue and milestones amounted
to $45.2 million in the first quarter of 2002 compared to $40.5 million in the
first quarter of 2001. Research revenue and milestones included $15.4 million
received from ADRC in the first quarter of 2002. This is matched by an equal
amount of costs included in operating expenses. There is no margin earned on
revenues from ADRC. The total amount of revenue included in research revenue
from our business ventures was $4.8 million in the first quarter of 2002 which
is offset by costs of $4.0 million included in research and development
expenditure. In the first quarter of 2001, research revenue from our business
ventures amounted to $6.2 million, offset by costs of $4.9 million. Elan has
also expensed $7.9 million for its share of the losses of its business
ventures. This amount is included in "net interest and other income/(loss)".
Gross profit
The gross profit margin on product sales was 70% in the first quarter of
2002 compared to 72% in the first quarter of 2001, reflecting changes in the
mix of product revenue. The overall gross margin was 78% in 2002 compared to
79% in 2001.
Operating expenses
Selling, general and administrative expenses increased by 20% from
$149.9 million in the first quarter of 2001 to $180.0 million in the first
quarter of 2002 reflecting principally higher sales and marketing expenditure,
including costs associated with the relaunch of Sonata and the Roxane pain
portfolio. Research and development expenses increased by 18% from
$74.0 million in the first quarter of 2001 to $87.2 million in the first
quarter of 2002 reflecting principally increased clinical trial expenditure,
particularly on Antegren.
Operating income
Operating income decreased from $116.2 million to $78.9 million in the
first quarter of 2002. This reflects the increased investment in research and
development and in sales and marketing support for our top 10 product lines.
During the first quarter of 2002, Elan successfully replaced product revenue
earned from the rationalisation program in 2001 with increased revenue from
its top 10 product lines.
Net interest and other income/(loss)
Net interest and other income/(loss) amounted to a loss of $17.0 million
in the first quarter of 2002 compared to income of $31.5 million in the first
quarter of 2001 reflecting investment losses of $17.7 million in the quarter
and expenses of $7.9 million representing Elan's share of the losses of its
business ventures.
Other charges
Other charges of $10.9 million in the first quarter of 2002 principally
arose from the costs of $8.8 million related to certain discontinued
operations. Other charges of $68.0 million in the first quarter of 2001
related principally to business integration and rationalisation costs.
Liquidity
The company retains a high degree of liquidity with $2,203.1 million in
cash and current marketable investment securities at March 31, 2002 of which
$1,437.1 million is in cash and cash equivalents. This compares with
$2,370.9 million in cash and current marketable investment securities at
December 31, 2001. During the quarter, the company invested $54.6 million in
tangible assets, $70.0 million in investments and marketable securities and
$127.4 million in product acquisition payments. Cash flow from operations was
$51.9 million before investments of $26.8 million in working capital.
Qualifying Special Purpose Entities ("QSPEs")
Included as an appendix is a pro-forma analysis of the impact on the first
quarter of 2002 results, assets and liabilities of consolidating the two
QSPEs, EPIL II and EPIL III. If the QSPEs were consolidated, "net interest
and other loss" would be increased by $14.1 million in the first quarter of
2002. The total liabilities of the QSPEs, which are guaranteed on a
subordinated basis by Elan, at March 31, 2002 were $1,022.6 million. These
liabilities include accrued interest of $22.6 million. In support of theses
liabilities, the QSPEs have $148.8 million in cash and also investments in
41 privately held and publicly quoted biotechnology and emerging
pharmaceutical companies. These investments are valued by the company on a
quarterly basis and annually by an investment bank.
Of the $1,000 million in principal amount of debt issued by the QSPEs,
$160.0 million falls due for repayment in June 2002. The next repayment date
is 2004.
Product launches in Q2, 2002
In March, the U.S. Food and Drug Administration ("FDA") granted marketing
approval of Elan's new drug application for Avinza (morphine sulfate
extended-release) capsules for the once-daily treatment of chronic,
moderate-to-severe pain in patients who require continuous, around-the-clock
therapy for an extended period of time. Avinza (formerly Morphelan) was
licensed to Ligand Pharmaceuticals Inc. for the U.S. and Canadian markets.
Elan retains marketing rights for the rest of the world and regulatory filings
are pending in major territories. The product will be manufactured by Elan in
the U.S. and is expected to be launched in the second quarter of 2002. Elan
has a 12-month period to exercise its option to co-promote Avinza with Ligand.
Also in March, Elan and UCB Pharma, Inc., the U.S. affiliate of a Belgian
research and development based international pharmaceutical and chemical group
("UCB"), entered into an agreement to co-promote Elan's new migraine drug
Frova (frovatriptan succinate) in the U.S. Elan and UCB will launch Frova in
the second quarter of 2002. Under the terms of the co-promotion agreement,
UCB will co-promote Frova with Elan to neurologists using their combined sales
forces of 265 field personnel. UCB will also promote Frova with its primary
care sales force of approximately 475 field representatives. The co-promotion
between the companies covers a seven-year period.
The FDA approved Frova 2.5mg tablets in November 2001 for the acute
treatment of migraine attacks with or without aura in adults. Migraine
attacks typically last 4 to 72 hours. One of Frova's unique features is that
it has a half-life of 26 hours. No other currently marketed triptan has a
half-life of more than 6 hours.
Product enhancements
Elan has made substantial progress on the implementation of its product
enhancement strategy for both Zanaflex and Skelaxin. This strategy involves,
among other things, new product formulations utilising Elan's drug delivery
technologies and the protection of our intellectual property. Two citizens'
petitions for Skelaxin have been accepted by the FDA requiring any Abbreviated
New Drug Application filing to include in-vivo studies and secondly noting the
fed-fast effect with Skelaxin. For competitive reasons, we are not disclosing
further details of our product enhancement strategies with respect to Skelaxin
and Zanaflex.
Elan is developing a number of new product formulations and presentations
for several of our currently marketed products, including Zonegran and Sonata.
Antegren
Elan successfully completed Phase IIb studies for Antegren in MS and
Crohn's disease in 2001. The results of these studies have been previously
presented at scientific meetings. The 6-month data of the Phase II study in
MS was presented at European Congress for the Treatment of MS in September
2001 and additional data from the study was recently presented at the American
Academy of Neurology conference in Denver on April 17, 2002. Data from the
Phase II study in Crohn's disease was presented at the Digestive Disease Week
meeting in May 2001. The data from both the MS and Crohn's disease studies,
which has been extensively reviewed, is very encouraging. At present, the
results from both studies are undergoing peer review for scientific
publication.
We have partnered the development and commercialisation of Antegren with
Biogen Inc. ("Biogen"). We value not only Biogen's expertise in MS, but also
their expertise in manufacturing biotechnology products. Elan and Biogen
initiated Phase III studies in both indications in the second half of 2001.
When fully enrolled, these Phase III clinical trials will have over 800
patients being studied with Crohn's disease and approximately 2,000 patients
with MS. The intended target population of the Phase III trials in MS is
patients with relapsing forms of MS, while Crohn's trials are intended to
study patients with moderate-to-severe Crohn's disease.
Elan continues to believe that Antegren will provide a meaningful advance
for patients with these debilitating diseases. Our clinical trial data so far
shows a high degree of efficacy and a mild side effect profile.
Alzheimer's Disease ("AD") Programmes
As background, Elan and Wyeth initiated a Phase IIa study with AN-1792
during 2001 in the U.S. and Europe. It was designed to evaluate the clinical
impact of eliciting an immune response, or formation of antibodies, to the
A-beta peptide in patients with mild to moderate AD. This clinical study is
the first attempt to evaluate this innovative immunotherapeutic treatment
approach in patients with AD. The trial was based on the work first reported
by Elan that immunisation against the beta-amyloid peptide could prevent or
clear amyloid plaque in the brains of transgenic mice. Beta amyloid is the
pathological hallmark of AD and considered by many experts in the field to be
fundamental to disease progression.
In early January 2002, Elan and Wyeth temporarily suspended all dosing of
AN-1792 following reports of inflammation within the central nervous system.
As announced on March 1, 2002, Elan and Wyeth, in consultation with the
independent Safety Monitoring Committee, decided not to resume any dosing with
AN-1792. Over the course of three trials there have been approximately
360 patients who have been exposed to multiple doses of AN-1792. The adverse
symptoms that were experienced by less than 5% of patients were consistent
with encephalitis or meningitis. To date, the majority of patients have
improved. We will continue to observe patients and their status. No patients
have died as a result of exposure to AN-1792.
AN-1792 represents the first in a series of therapeutic approaches being
pursued by Elan and Wyeth to treat and prevent AD. Elan and Wyeth have formed
one of the broadest research alliances in the pharmaceutical industry to
develop immunotherapeutic approaches to treat and prevent AD. All costs and
potential revenues are shared equally. Elan and Wyeth have several
second-generation immunotherapeutic compounds in preclinical development. As
a follow-up to the active immunisation approach, we are leveraging the
innovative conjugate technology from Wyeth that is designed to more precisely
focus and limit the possible responses of the patient's immune system. In
these new vaccines, we have engineered out all but the much smaller relevant
portion of the peptide, restricting the possible ways in which the patient's
immune system can respond. Theoretically, this will best control the response
and improve the safety of these compounds. Elan and Wyeth are also pursuing a
passive immunisation approach through the development of monoclonal
antibodies. This approach eliminates the need of the patient's immune system
to mount an immune response against the amyloid peptide.
In addition to our collaboration with Wyeth, Elan has two other separate
and distinct research and development programmes in AD. Elan has a
collaboration with Pharmacia focusing on the discovery and development of
small molecule inhibitors of beta-secretase for the treatment of AD. Elan and
Pharmacia share all costs and potential revenues equally. Elan also has an
internal programme focusing on the discovery and development of
gamma-secretase inhibitors.
Elan and its partners are committed to further research and to finding a
cure for AD, an affliction that claims millions of lives each year. A number
of INDs are expected to be filed in the next 18 months.
Other key development projects
Myobloc, Elan's botulinum toxin type B, approved for the treatment of
cervical dystonia, is the subject of a broad programme of clinical trials with
the primary focus on facial lines and pain. Extensive clinical trials
necessary to explore the broader use of this product are ongoing. The first
publications from these trials are expected mid-year.
Elan achieved very strong prescription growth of 204% in the first quarter
of 2002 for Zonegran, which is approved for the treatment of epilepsy patients
with partial seizures. A clinical programme has been initiated across a broad
therapeutic range, with particular emphasis on investigating the safety and
efficacy of Zonegran as prophylaxsis treament in migraine and in acute mania.
With respect to Prialt, the final Phase III clinical trials are being
initiated. The FDA has agreed that Prialt may be made available to patients
under a treatment IND.
Drug delivery pipeline update
Significant progress was made during the quarter in advancing Elan's drug
delivery pipeline. Highlights include:
* Ligand: As outlined above, U.S. approval was received for our NDA for
Avinza (formerly Morphelan), our once daily oral morphine product,
licensed to Ligand for marketing in the U.S. and Canada. European
marketing approval is anticipated later in 2002. Our marketing strategy
for Avinza in Europe is under development. We are contemplating signing
a European marketing partner.
* Novartis: Successful completion of a pre-approval inspection by the FDA
of our U.S. manufacturing facility for an undisclosed product licensed
to Novartis. An NDA was submitted for this product in 2001.
* Wyeth: The 2mg NanoCrystal tablet formulation of Rapamune was filed
with the FDA by our licensee, Wyeth. The 1mg NanoCrystal tablet was
launched by Wyeth during 2001.
* Wyeth: Initial development work has commenced on a number of new
formulations of Sonata , consistent with our agreement with Wyeth
entered into late in 2001.
Elan's drug delivery pipeline currently includes one product recently
approved and awaiting launch, four product applications on file with the FDA
and approximately 25 projects in clinical development, including six in Phase
III/pivotal trials. In addition, the drug delivery business is progressing a
range of product enhancement projects for Elan's Biopharmaceuticals business
and a large number of preclinical and clinical projects for Elan's business
ventures not included in these pipeline numbers (see business ventures below).
Business ventures
Elan, its business venture partners and its business ventures have made
continued progress in recent months in terms of advancing development projects
through clinical trials and securing additional financing. Currently our
business venture pipeline includes approximately 30 products in clinical
development, including four in Phase III/pivotal trials. Recent news flow on
our business ventures includes:
* In March, it was announced that Elan and Iomai Corporation's business
venture, Xairo Corporation Ltd., had entered into a master license,
development and supply agreement with Berna Biotech for vaccine/adjuvant
development.
* In April, Isis Pharmaceuticals, Inc. ("Isis") announced that HepaSense,
its business venture with Elan had achieved a development milestone
related to the successful completion of a nine-month toxicology study
and the demonstration of acceptable safety and reduction of Hepatitis C
Virus ("HCV") titres in an initial Phase I/II clinical trial.
Achievement of the milestone triggered a $3.75 million equity purchase
by Elan of Isis common stock. Also, in March, HepaSense announced the
initiation of a Phase II clinical trial of ISIS 14803 in patients with
chronic HCV infections. The Phase II clinical trial will evaluate the
safety and tolerability of ISIS 14803, an antisense drug that inhibits
HCV replication, when administered by intravenous infusion. Separately,
in March, Isis announced the initiation of a Phase II clinical trial of
a parenteral formulation of ISIS 104838, an antisense inhibitor of
tumour necrosis factor-alpha (TNF-alpha), in rheumatoid arthritis. An
oral formulation of ISIS 104838 is being developed in Phase I clinical
trials by Orasense, a business venture between Isis and Elan.
* In April, GlycoGenesys, Inc. (formerly known as SafeScience Inc.)
announced that its business venture with Elan had completed a Phase IIa
clinical trial of GCS-100 (formerly called GBC-590) in refractory or
relapsed colorectal and pancreatic cancer patients. The business
venture initiated a new Phase I human clinical dose escalation trial
with GCS-100. The study builds on the knowledge from the previous Phase
IIa colorectal and pancreatic clinical trials. In January, GlycoGenesys
also announced the completion of a private placement of $5.1 million of
common stock.
* In March, Inex Pharmaceuticals Corporation announced that its business
venture with Elan had achieved its objective of enrolling a minimum of
100 patients in the pivotal human clinical trial evaluating its lead
product Onco TCS, as a treatment for relapsed aggressive non-Hodgkin's
lymphoma.
* In March, Elite Research Ltd., a business venture between Elite
Pharmaceuticals, Inc. and Elan announced the successful completion of
the initial Phase I study for its first product. The study compared a
novel once-a-day formulation of a leading pain management therapeutic
against the twice-daily marketed reference product. The data showed
comparable bioavailability and as a result the business venture is
moving to the next stage of development.
* In March, Generex Biotechnology Corporation announced that its business
venture with Elan had received approval of an IND application from
Health Canada to commence clinical trials of buccal morphine for the
treatment of pain. In January 2002, Phase I proof of concept studies
outside the U.S. were completed.
* In January, Ribozyme Pharmaceuticals, Inc. ("RPI") announced that they
had expanded their strategic collaboration with Elan whereby the
business venture will have access to Elan's liposome technology for the
development and potential commercialisation of RPI's ribozyme against
the Human Epidermal Growth Factor Receptor (HER2), Herzyme.
* In April, Synerobex Ltd., the business venture between Nobex Corporation
and Elan initiated dosing in a Phase I clinical trial in the development
of Oratonin, a novel oral calcitonin formulation, for the treatment of
osteoporosis.
* In April, DOV Pharmaceutical, Inc. ("DOV") raised $65 million through an
initial public offering. DOV's core expertise is in the cellular and
molecular pharmacology underlying central nervous system and
cardiovascular disorders. DOV has five product candidates in clinical
trials addressing therapeutic indications in insomnia (Phase III),
anxiety disorders (Phase II), pain (Phase II), angina and hypertension
(Phase I) and depression (Phase I). The business venture formed by DOV
and Elan is developing oral sustained release formulations of two new
chemical entities:
- Ocinaplon for the treatment of anxiety disorders (Phase II)
- Bicifadine for the treatment of pain. (Phase II)
* Allergy Therapeutics (Holdings) Ltd., a business venture partner with
Elan, and SIGA Technologies, Inc. announced in March that they had
signed a non-binding letter of intent to combine the two companies.
2002 action plan
Elan set out the strategic rationale behind this year's research and
development and marketing investments during the year-end conference call.
Making these investments will put us in an even stronger position to reap the
greatest reward from our portfolio of marketed products and our extensive
product pipeline. Elan has a strong underlying business, a promising
pipeline, an experienced management team and a credible plan of action to deal
with its present challenges. This plan of action includes:
1.) Business rationalisations - Elan will continue to simplify the
composition of its business by disposing of products, assets, sites
and businesses that are not strategic. The objective is to focus our
business and management on our selected therapeutic areas and top 10
product lines. In addition, we will streamline the business focusing
investment in those products and projects which demonstrate the best
return.
2.) Capital structure review - through 2002 Elan will carefully review its
capital structure and consider the realisation of some of its
significant investment portfolio with the objective of reducing the
complexity of the company's balance sheet while maximising financial
flexibility and liquidity.
3.) Acquisitions/in-licensing - Elan is targeting the acquisition of
in-market products with sales potential of greater than $100 million
for the U.S. market and $50 million for European markets. Our five
selected therapeutic areas are neurology, pain, infectious disease,
dermatology and oncology. The strategy is to expand our product
offerings and infrastructure in areas in which we can compete most
effectively. Elan is also continually monitoring the industry for
molecules in development that could be in-licensed to further enhance
our existing strong development pipeline. Our acquisition strategy
will be tempered by our target to retain maximum financial flexibility
and liquidity.
4.) Focused investment in research and development activities:
- Maximise the potential return on our key development programmes such
as Prialt, Antegren, Zonegran, and Myobloc, together with the
product enhancement activities on several of our marketed products
such as Zanaflex, Skelaxin and Sonata.
- Continued commitment to our drug delivery and business venture
partners. We have approximately 50 business ventures with
approximately 30 products in clinical development and four in Phase
III/pivotal trials. Our drug delivery partners have one product
recently approved and awaiting launch, four product applications on
file with the FDA and approximately 25 products in clinical
development, including six in Phase III/pivotal trials.
- Advancement of our Alzheimer's programmes with Wyeth and Pharmacia,
our cell trafficking programme with Wyeth and our other discovery
programmes in neurodegenerative diseases and analgesia.
Elan is a leading worldwide, fully integrated biopharmaceutical company
headquartered in Ireland, with its principal research, development,
manufacturing and marketing facilities located in Ireland and the U.S. Elan
is focused on the marketing of therapeutic products and services in neurology,
pain management, infectious disease, dermatology, oncology and 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 other words and terms of similar meaning in connection with any discussion
of future operating or financial performance. 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 authorisations 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
towards 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; the outcome of the ongoing SEC investigation and
shareholder litigation, 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/A1 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.
(1.) Prescription data for hospital products, like Maxipime and Abelcet,
are not available from information providers. The best indicator is
audited sales volumes
Three months ended March 31,
Income Statement Data 2001 2002
US$m US$m
Revenues
Product revenues 324.1 330.4
Contract revenues 105.2 113.2
Total revenues 429.3 443.6
Costs and Expenses
Research & development 74.0 87.2
Cost of goods sold 89.2 97.5
Selling, general & administrative 149.9 180.0
Total operating expenses 313.1 364.7
Operating income 116.2 78.9
Net interest income/(loss) 5.1 (5.0)
Business venture funding (5.0) (7.9)
Investment gains 34.2 13.6
Investment losses (2.8) (17.7)
Net interest and other income/(loss) 31.5 (17.0)
Net income before tax and other charges 147.7 61.9
Taxation (3.3) (1.0)
Net income before other charges 144.4 60.9
Other charges (68.0) (10.9)
Net income 76.4 50.0
Weighted number of ordinary shares outstanding
(in thousands):
Basic 327,608 349,500
Diluted - for EPS before other charges 375,437 353,029
Diluted - for EPS after other charges 352,839 353,029
Zero coupon notes interest add-back:(2)
For EPS before other charges 7.8 --
For EPS after other charges -- --
Diluted earnings per ordinary share before
other charges and investment losses $0.41 $0.22
Diluted earnings per ordinary share before
other charges $0.41 $0.17
Diluted earnings per ordinary share after
other charges $0.22 $0.14
Other Information
Gross margin 340.1 346.1
Depreciation and amortisation included in
operating costs 44.1 46.1
As at As at
Balance Sheet Data December 31, March 31,
2001 2002
Assets US$m US$m
Current Assets
Cash and cash equivalents 1,662.7 1,437.1
Marketable investment securities 708.2 766.0
Other current assets 616.6 611.2
2,987.5 2,814.3
Intangible assets 2,124.6 2,126.4
Property, plant and equipment 401.1 442.6
Investments and marketable investment securities 820.8 846.8
Total Assets 6,334.0 6,230.1
Liabilities and Shareholders' Equity
Shareholders' equity 3,291.8 3,353.4
Accounts payable and accrued liabilities 1,053.2 883.4
7.25% senior notes due 2008 650.0 646.5
3.25% zero coupon subordinated exchangeable
notes due 2018 951.4 959.2
Senior unsecured revolving credit facility 2004 325.0 325.0
3.5% convertible subordinated notes due 2002 62.6 62.6
Total Liabilities and Shareholders' Equity 6,334.0 6,230.1
Cash Flow Data - Three months ended March 31, 2002 US$m
Cashflows from operating activities 51.9
Working capital movement (26.8)
Net purchase of tangible assets (54.6)
Net purchase of investments and marketable investment securities (70.0)
Product acquisition payments (127.4)
Cash flows from financing activities 1.3
Net Cash Movement (225.6)
Cash and cash equivalents at beginning of year 1,662.7
Cash and cash equivalents at end of period 1,437.1
Pro-Forma Financial Information Relating to
Qualified Special Purpose Entities (QSPEs)
- Three months ended March 31, 2002 As reported Pro-forma
US$m US$m
Net income after other charges 50.0 35.9
Diluted earnings per ordinary share after
other charges $0.14 $0.10
Total assets 6,230.1 6,974.3
Total indebtedness 1,993.3 2,993.3
Shareholders' equity 3,353.4 3,075.0
Historic Revenue Analysis
Total revenue analysis (US$m) Q1 2001A Q1 2002A Q1 Change
'01 - '02
Product Revenue
Top 10 US Product Lines
CNS/Pain 63.3 137.8 118%
Infectious Disease 45.9 47.7 4%
Dermatology 10.6 18.1 71%
Sub-total 119.8 203.6 70%
European products 16.7 22.3 34%
Co-marketing, international
and other 59.7 53.3 (11%)
Diagnostics 12.5 16.8 34%
Contract manufacturing and
royalties 26.6 21.4 (20%)
Sub-total 115.5 113.8 (1%)
Product Revenue before
Rationalisation 235.3 317.4 35%
Rationalisation Program
Product revenue before
disposal/partnering 38.8 7.3 (81%)
Rationalisation revenue 50.0 5.7 (89%)
88.8 13.0 (85%)
Total Product Revenue 324.1 330.4 2%
Contract Revenue
Amortisation of fees 64.7 68.0 5%
Research revenue and milestones 40.5 45.2 12%
Total Contract Revenue 105.2 113.2 8%
Total Revenue 429.3 443.6 3%
Ratio Analysis Q1 2001A Q1 2002A
Product revenue / Total revenue 75% 74%
Product Revenue before
rationalisation/Product revenue 73% 96%
Top 10 US product
lines / Product revenue 37% 62%
Historic Revenue Analysis
Q1 2001A Q1 2002A Q1 Change
'01 - '02
CNS/Pain
Zanaflex 35.1 53.7 53%
Skelaxin 18.6 33.5 80%
Pain portfolio -- 13.9 n/a
Zonegran 6.9 10.4 51%
Myobloc 2.7 2.8 4%
Sonata -- 23.5 n/a
Sub-total 63.3 137.8 118%
Infectious Disease
Maxipime 13.9 17.2 24%
Abelcet 20.2 23.4 16%
Azactam 11.8 7.1 (40%)
Sub-total 45.9 47.7 4%
Dermatology 10.6 18.1 71%
Total Top 10 US Product Lines 119.8 203.6 70%
European products
Abelcet -- 3.2 n/a
Dilzem 2.5 3.0 20%
Univer 1.5 1.5 0%
Zanaflex 1.6 1.8 13%
Neurobloc 0.1 0.4 300%
Myocet(3) -- 1.3 n/a
Other products 11.0 11.1 1%
Total European products 16.7 22.3 34%
Prescription Trends ('000) Q1 2001A Q1 2002A Q1 Change
'01 - '02
Zanaflex 421 776 84%
Skelaxin 873 1,129 29%
Roxicodone 140 146 4%
Zonegran 26 79 204%
Sonata 449 425 (5%)
Maxipime(4) 1,247 1,694 36%
Abelcet(4) 184 200 9%
Azactam(4) 454 447 (2%)
(2) The interest add back on the zero coupon notes represents an
adjustment to net income for the purposes of calculating diluted EPS.
This interest add back adjustment and the corresponding adjustment to
diluted shares is only made if the zero coupon notes would have a
dilutive effect on the relevant EPS number.
(3) Based upon the current performance of Myocet, we do not believe that
the holders of Elan's contingent value rights will receive any
additional milestone payments resulting from the achievement of
revenue milestones in either the third or fourth quarter of 2002.
(4) Represents audited sales volumes for 3 months
SOURCE Elan Corporation, plc
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Investors, Europe, Emer Reynolds,
+353-1-709-4000, or +800-2835-2600, or in U.S., Jack Howarth,
+1-212-407-5740, or +1-800-252-3526, or Media, Max Gershenoff,
+1-212-704-8173, all of Elan Corporation, plc
