Elan Reports First Quarter 2006 Financial Results.DUBLIN, Ireland -- Elan (Emulated LAN) A virtual LAN in the ATM world. See LANE and virtual LAN. Elan - ["Top-down Programming with Elan", C.H.A. Koster, Ellis Horwood 1987]. Corporation, plc today announced its first quarter 2006 financial results and provided a business update. Commenting on Elan's business, Kelly Martin, Elan's president and chief executive officer, said, "Our first quarter results demonstrate continued progress across all areas of our company. Our operating discipline, focus on execution, and commitment to deliver tangible and measurable results continue to serve as our core principles from which we drive the leadership and management of our company. Our continued progress enables us to bring our science closer to the patients across a broad array of chronic and acute diseases, with the potential to fundamentally improve the quality of their lives. We expect the breadth and depth of accomplishments that we have achieved in this first quarter to continue and build momentum as we move through the year." Commenting on Elan's first quarter financial results, Shane Cooke Shane Cooke is a Dublin born Gaelic football player who played for Laois under the parentage rule. At club level, Shane usually lines out in attack with St Marys (Saggart). , executive vice president and chief financial officer, said, "We are very pleased with the progress we made across all our business and development activities during the first quarter. This progress is reflected in continued improved financial performance. Revenues are up 31% and the net loss is down 71% over last year. This improved financial performance is largely due to growth in revenues, the continued improvement in operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: , and the costs associated with the temporary suspension of Tysabri in February 2005, offset by the impact of expensing share-based compensation for the first time. We remain committed to making Tysabri available for patients in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. and Europe and are confident that, with the financial leverage we have created over the last year, revenues from Tysabri will accelerate our return to profitability."
Unaudited Consolidated Income Statement Data and Reconciliation of
U.S. GAAP Income Statement Data to Adjusted Income Statement Data
Excluding Share-Based Compensation
Three Months Ended March 31
------------------------------------------------
2006
US$m 2006
Excluding US$m 2006
2005 Share-Based Share-Based US$m
US$m Compensation Compensation Total
----------------------------------------------------------------------
Revenue (see page 7)
Product revenue 95.4 128.2 -- 128.2
Contract revenue 7.3 6.1 -- 6.1
--------- --------------------------- ----------
Total revenue 102.7 134.3 -- 134.3
Operating Expenses
(see page 10)
Cost of goods sold 63.0 47.8 1.1 48.9
Selling, general and
administrative 102.6 78.4 7.3 85.7
Research and
development 55.9 46.5 4.3 50.8
Net gain on
divestment of
products and
businesses (44.1) (44.2) -- (44.2)
--------- --------------------------- ----------
Total operating
expenses 177.4 128.5 12.7 141.2
--------- --------------------------- ----------
Operating
(loss)/profit (74.7) 5.8 (12.7) (6.9)
--------- --------------------------- ----------
Net Interest and
Investment Gains and
Losses (see page 11)
Net interest expense 36.0 27.4 -- 27.4
Net investment
(gains)/losses 4.5 (2.3) -- (2.3)
--------- --------------------------- ----------
Net interest and
investment losses 40.5 25.1 -- 25.1
--------- --------------------------- ----------
Net loss from
continuing
operations before
tax (115.2) (19.3) (12.7) (32.0)
Provision for income
taxes 0.2 1.3 -- 1.3
--------- ------------- ------------- ----------
Net loss from
continuing
operations (115.4) (20.6) (12.7) (33.3)
Net loss from
discontinued
operations (0.2) -- -- --
--------- ------------- ------------- ----------
Net loss (115.6) (20.6) (12.7) (33.3)
--------- ------------- ------------- ----------
Basic and diluted net
loss per ordinary
share (0.29) (0.05) (0.03) (0.08)
Basic and diluted
weighted average
number of ordinary
shares outstanding
(in millions) 395.6 428.9 428.9 428.9
To supplement its consolidated income statement data presented on a
U.S. GAAP basis, Elan is providing its income statement data adjusted
to exclude the impact of share-based compensation. Effective January
1, 2006, Elan adopted Statement of Financial Accounting Standards No.
123R (SFAS 123R) regarding the expensing of share-based compensation.
We believe the adjusted income statement data allows readers to better
compare the performance of Elan before and after the adoption of SFAS
123R. Elan's management uses the adjusted income statement data in
evaluating Elan's operating performance and when planning for future
periods. The adjusted income statement data is not being presented as
an alternative measure of operating results as determined in
accordance with U.S. GAAP. The reconciliations of the adjusted income
statement data to Elan's U.S. GAAP income statement data are set out
above in the table titled, "Unaudited Consolidated Income Statement
Data and Reconciliation of U.S. GAAP Income Statement Data to Adjusted
Income Statement Data Excluding Share-Based Compensation".
Unaudited Non-GAAP Financial Information - EBITDA
Non-GAAP Financial Information Three Months Ended
Reconciliation Schedule March 31
-------------------
2005 2006
US$m US$m
----------------------------------------------------------------------
Net loss from continuing operations (115.4) (33.3)
Net interest expense 36.0 27.4
Provision for income taxes 0.2 1.3
Depreciation and amortization 34.5 32.6
Amortized fees (11.6) (11.4)
--------- ---------
EBITDA (56.3) 16.6
========= =========
Non-GAAP Financial Information Three Months Ended
Reconciliation Schedule March 31
-------------------
2005 2006
US$m US$m
----------------------------------------------------------------------
EBITDA (56.3) 16.6
Share-based compensation -- 12.7
Net gain on divestment of products and businesses (44.1) (44.2)
Net investment (gains)/losses 4.5 (2.3)
--------- ---------
Adjusted EBITDA (95.9) (17.2)
========= =========
To supplement its consolidated financial statements presented on a
U.S. GAAP basis, Elan provides readers with EBITDA (Earnings Before
Interest, Taxes, Depreciation and Amortization) and Adjusted EBITDA,
non-GAAP measures of operating results. EBITDA is defined as net loss
from continuing operations plus or minus depreciation and amortization
of costs and revenues, provisions for income tax and net interest
expense. Adjusted EBITDA is defined as EBITDA plus or minus
share-based compensation, net gains or losses on divestment of
products and businesses, other significant net gains or charges, and
net investment gains or losses. EBITDA and Adjusted EBITDA are not
presented as alternative measures of operating results or cash flow
from operations, as determined in accordance with U.S. GAAP. Elan's
management uses EBITDA and Adjusted EBITDA to evaluate the operating
performance of Elan and its business and these measures are among the
factors considered as a basis for Elan's planning and forecasting for
future periods. Elan believes EBITDA and Adjusted EBITDA are measures
of performance used by some investors, equity analysts and others to
make informed investment decisions. EBITDA and Adjusted EBITDA are
used as analytical indicators of income generated to service debt and
to fund capital expenditures. EBITDA and Adjusted EBITDA do not give
effect to cash used for interest payments related to debt service
requirements and do not reflect funds available for investment in the
business of Elan or for other discretionary purposes. EBITDA and
Adjusted EBITDA, as defined by Elan and presented in this press
release, may not be comparable to similarly titled measures reported
by other companies. Reconciliations of EBITDA and Adjusted EBITDA to
net loss from continuing operations are set out in the tables above
titled, "Non-GAAP Financial Information Reconciliation Schedule."
Unaudited Consolidated U.S. GAAP Balance Sheet Data
December 31 March 31
2005 2006
US$m US$m
----------------------------------------------------------------------
Assets
Current Assets
Cash and cash equivalents 1,080.7 1,078.9
Restricted cash 20.4 20.6
Marketable investment securities 10.0 11.3
Prepaid and other current assets 141.3 126.3
------------- -----------
Total current assets 1,252.4 1,237.1
Non-Current Assets
Intangible assets, net 665.5 643.9
Property, plant and equipment, net 353.6 351.4
Investments and marketable investment
securities 13.1 10.1
Restricted cash 4.5 4.4
Other assets 51.8 55.2
------------- -----------
Total Assets 2,340.9 2,302.1
============= ===========
Liabilities and Shareholders' Equity
Accounts payable and accrued liabilities 246.7 233.3
Deferred income 60.1 48.7
6.5% convertible guaranteed notes due 2008 254.0 254.0
7.25% senior notes due 2008 613.2 613.2
7.75% senior notes due 2011 850.0 850.0
Senior floating rate notes due 2011 300.0 300.0
Shareholders' equity 16.9 2.9
------------- -----------
Total Liabilities and Shareholders' Equity 2,340.9 2,302.1
============= ===========
Movement in Shareholders' Equity
Opening balance 16.9
Net loss for the period (33.3)
Share-based compensation 12.7
Issuance of share capital 4.5
Other 2.1
-----------
Closing balance 2.9
===========
Unaudited Consolidated U.S. GAAP Cash Flow Data
Three Months Ended
March 31
----------------------
2005 2006
US$m US$m
----------------------------------------------------------------------
Cash outflows from operating activities (88.1) (6.8)
Movement on debt interest and tax (24.2) (28.2)
Working capital movement (4.9) (22.8)
Net purchases of tangible and intangible assets (22.0) (7.4)
Net proceeds from sale of investments 20.7 8.3
Net proceeds from product and business
divestments 31.9 50.3
Cash inflows from financing activities 12.5 4.7
Release of restricted cash 124.1 0.1
Repayment of EPIL III notes (39.0) --
----------- ----------
Net cash movement 11.0 (1.8)
Beginning cash balance 1,347.6 1,080.7
----------- ----------
Cash and cash equivalents at end of period 1,358.6 1,078.9
=========== ==========
Net Loss The net loss for the first quarter of 2006 amounted to $33.3 million, a decrease of 71% over the $115.6 million reported in the same quarter of 2005. The decrease in net loss is principally due to strong growth in product revenue as a result of more favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. supply conditions, the improvement in operating margins due to ongoing financial discipline, and the voluntary suspension of Tysabri(TM) in February 2005, partially offset by the impact of expensing share-based compensation for the first time. The 2006 net loss includes a gain of $44.2 million related to the sale of the Prialt(TM) European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. rights to Eisai Co., Ltd (Eisai) while the 2005 net loss included a gain of $42.0 million of consideration related to the divestment divestment to strip one's investment from an entity. of Zonegran Zonegran® Zonisamide Neurology An agent used to manage partial seizures in adults with epilepsy. See Seizures. (TM) (zonisamide zonisamide /zo·nis·am·ide/ (zo-nis´ah-mid?) a sulfonamide that acts as an anticonvulsant, used in the treatment of partial seizures in adults. ) to Eisai in April 2004. Share-Based Compensation Effective January 1, 2006, Elan adopted the provisions of SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System 123R, which requires share-based awards to be measured using a fair value method and expensed over the requisite service period. The adoption of SFAS 123R resulted in a charge for share-based compensation of $12.7 million for the first quarter of 2006, which is comprised of $1.1 million of cost of goods sold Cost of goods sold The total cost of buying raw materials, and paying for all the factors that go into producing finished goods. cost of goods sold , $7.3 million of selling, general and administrative (SG&A) expense, and $4.3 million of research and development (R&D) expense. Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become A reconciliation of negative Adjusted EBITDA to net loss from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the , is presented in the table titled, "Unaudited Non-GAAP Financial Information - EBITDA," included on page 3. A further analysis of Adjusted EBITDA between Tysabri and the rest of the business is included in Appendix I. Negative Adjusted EBITDA was $17.2 million in the first quarter of 2006, compared to $95.9 million in the first quarter of 2005, an improvement of 82%, and includes negative Adjusted EBITDA of $21.4 million related to Tysabri (2005: $60.1 million). The improvement in negative Adjusted EBITDA related to Tysabri reflects the costs associated with the voluntary suspension of Tysabri in the first quarter of 2005, and consequent con·se·quent adj. 1. a. Following as a natural effect, result, or conclusion: tried to prevent an oil spill and the consequent damage to wildlife. b. reduced spending on both research and development and commercial activities for Tysabri in the first quarter of 2006, compared to the spending level in the first quarter of 2005. Adjusted EBITDA for the rest of the business, excluding costs related to Tysabri, was $4.2 million (2005: negative $35.8 million). The improvement in Adjusted EBITDA from the rest of the business reflects principally the strong growth in product revenues and improved operating margins. Revenue Total revenue increased 31% to $134.3 million in the first quarter of 2006 from $102.7 million recorded in the first quarter of 2005. Revenue is analyzed an·a·lyze tr.v. an·a·lyzed, an·a·lyz·ing, an·a·lyz·es 1. To examine methodically by separating into parts and studying their interrelations. 2. Chemistry To make a chemical analysis of. 3. below between product revenue and contract revenue.
Three Months Ended
March 31
--------------------
2005 2006
US$m US$m
----------------------------------------------------------------------
Revenue from Marketed Products
Maxipime(TM) 19.8 44.7
Azactam(TM) 8.4 19.9
Tysabri 12.9 (0.1)
Prialt 1.0 2.6
---------- ---------
Total Revenue from Marketed Products 42.1 67.1
---------- ---------
Manufacturing Revenue and Royalties (see page 8) 44.7 52.6
Amortized Revenue - Adalat(TM)/Avinza(TM) 8.5 8.5
Revenue from Divested Products 0.1 --
---------- ---------
Total Product Revenue 95.4 128.2
---------- ---------
Contract Revenue
Amortized fees 3.4 2.1
Research revenue and milestones 3.9 4.0
---------- ---------
Total Contract Revenue 7.3 6.1
---------- ---------
---------- ---------
Total Revenue 102.7 134.3
========== =========
Product Revenue Total product revenue increased 34% to $128.2 million in the first quarter of 2006 from $95.4 million recorded in the same quarter of 2005 primarily due to increased revenue from marketed products and manufacturing revenue and royalties, as further analyzed below. Revenue from marketed products Revenue from marketed products was $67.1 million in the first quarter of 2006, compared to $42.1 million recorded in the same period of 2005. The increase of 59% is due to higher sales of Maxipime Max·i·pime A trademark for the drug cefepime hydrochloride. cefepime hydrochloride Maxipime Pharmacologic class: Fourth-generation cephalosporin Therapeutic class: , Azactam A·zac·tam A trademark for the drug aztreonam. aztreonam Azactam Pharmacologic class: Monobactam Therapeutic class: Anti-infective Pregnancy risk category B and Prialt, offset by a decrease in the sales of Tysabri, which was voluntarily suspended sus·pend v. sus·pend·ed, sus·pend·ing, sus·pends v.tr. 1. To bar for a period from a privilege, office, or position, usually as a punishment: suspend a student from school. from the market in February 2005. Revenue from Maxipime for the quarter increased by 126% to $44.7 million from $19.8 million in the first quarter of 2005. This increase reflects improved supply conditions, which we continue to monitor closely. During the first quarter of 2005, revenue from the sales of Maxipime was negatively impacted by supply shortages. Azactam revenue for the quarter increased to $19.9 million from $8.4 million in the first quarter of 2005, or 137%. This increase is due to improved supply conditions and demand. Azactam lost its patent exclusivity in October 2005 and its sales are expected to be negatively impacted by generic competition. However, to date no generic Azactam product has been approved. Revenue from Prialt for the first quarter of 2006 was $2.6 million, compared to $1.0 million recorded in the first quarter of 2005 when Prialt was launched in the U.S. market. Revenue from Tysabri in the first quarter of 2006 was negative $0.1 million, compared to $12.9 million recorded in the same period of 2005 due to the voluntary suspension from the U.S. market on February 28, 2005. Manufacturing revenues and royalties Manufacturing revenue and royalties from Elan's Drug Technology business comprise revenue earned from products manufactured for third parties and royalties earned principally on sales by third parties of products that incorporate Elan's technologies. Manufacturing revenue and royalties were $52.6 million in the first quarter of 2006, an increase of 18% over the $44.7 million recorded in the first quarter of 2005, and can be further analyzed as follows:
Three Months Ended
March 31
----------------------
2005 2006
US$m US$m
----------------------------------------------------------------------
Verelan(TM) 9.1 11.5
Tricor(TM) 8.4 10.2
Diltiazem(TM) 5.0 5.2
Skelaxin(TM) 3.9 4.8
Avinza(TM) 2.1 3.0
Ritalin(TM) 3.5 2.6
Zanaflex(TM) 2.3 0.7
Other 10.4 14.6
----------- ----------
Total 44.7 52.6
=========== ==========
Except as noted above, no other product accounted for more than 10% of total manufacturing revenue and royalties in the first quarter of 2006 or 2005. Of the total of $52.6 million (2005: $44.7 million) in manufacturing revenue and royalties, 31% (2005: 31%) consisted of royalties received on products that were not manufactured by Elan. Amortized product revenue The results for the first quarters of 2006 and 2005 include $8.5 million of amortized revenue related to the licensing of rights to Elan's generic form of Adalat Ad·a·lat A trademark for the drug nifedipine. CC and the restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). of Elan's Avinza license agreement with Ligand ligand (lĭg`ənd), charged or uncharged molecule with one or more unshared pairs of electrons that can attach to a central metallic atom or ion to form an aggregate known as a complex ion (see chemical bond). Pharmaceuticals, Inc, which occurred in 2002. The remaining unamortized revenue on these products of $26.7 million, which is included in deferred income, will be recognized as revenue through June 2007 (generic Adalat CC), and November 2006 (Avinza), reflecting Elan's ongoing involvement in the manufacturing of these products. Amortized revenue for the full-year 2006 is expected to be $30.7 million for these two products. Contract Revenue Contract revenue in the first quarter of 2006 was $6.1 million, a decrease of 16% from the $7.3 million recorded in the first quarter of 2005. This decrease primarily reflects a reduction in amortized fees. Gross Profit The gross profit margin Gross profit margin Gross profit divided by sales, which is equal to each sales dollar left over after paying for the cost of goods sold. gross profit margin A measure calculated by dividing gross profit by net sales. on product revenue was 62% in the first quarter of 2006, compared to 34% in the same period of 2005. The increase is due principally to the costs associated with the voluntary suspension of marketing of Tysabri in the first quarter of 2005 and due to the change in the mix of product revenues. The gross profit margin on product revenue for the rest of the business improved significantly, from 54% in the first quarter of 2005 to 62% in the first quarter of 2006. This improvement principally reflects the change in the mix of product revenue as a result of the growth in revenues from Maxipime and Azactam. Operating Expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. R&D expenses were $50.8 million in the first quarter of 2006 (including $4.3 million of share-based compensation expense), compared to $55.9 million in the same period of 2005. The decrease of 9% is primarily due to reduced expenses related to Tysabri and Prialt, offset by the impact of expensing of share-based compensation for the first time and increased development costs associated with our key Alzheimer's programs, including the AAB-001 Phase 2 trials and ACC-001 Phase 1 trial. Included in R&D expenses for the first quarter of 2006 is $6.0 million related to Tysabri (including $0.8 million of share-based compensation expense), compared to $17.4 million in the same period of 2005. The decrease principally reflects the suspension of dosing and the completion of clinical trials. SG&A expenses decreased 16% to $85.7 million in the first quarter of 2006 (including $7.3 million of share-based compensation expense) from $102.6 million in the same quarter of 2005 and can be analyzed as follows:
Three Months Ended
March 31
---------------------
2005 2006
US$m US$m
----------------------------------------------------------------------
Rest of business 51.6 44.1
Tysabri 30.3 15.4
Depreciation and amortization (principally
Maxipime and Azactam) 20.7 18.9
Share-based compensation -- 7.3
---------- ----------
Total 102.6 85.7
========== ==========
SG&A expenses, excluding amortization and share-based compensation, related to the rest of the business decreased by 15% to $44.1 million in the first quarter of 2006 from $51.6 million in the first quarter of 2005, principally due to the initiatives implemented following the voluntary suspension of Tysabri. The SG&A expenses related to Tysabri, excluding amortization and share-based compensation, were $15.4 million in the first quarter of 2006, compared to $30.3 million in the first quarter of 2005 when Tysabri was on the market for the first two months of the quarter. Net Gain on Divestment of Product and Businesses The net gain on divestment of product and businesses in the first quarter of 2006 was $44.2 million, compared to $44.1 million in the same period of 2005. The net gain in the first quarter of 2006 relates to the sale of the Prialt European rights to Eisai. This transaction closed in March 2006. Elan received $50.0 million at closing and is entitled en·ti·tle tr.v. en·ti·tled, en·ti·tling, en·ti·tles 1. To give a name or title to. 2. To furnish with a right or claim to something: to receive an additional $10.0 million on the earlier of two years from closing or launches of Prialt in key European markets, and may receive an additional $40.0 million contingent on Adj. 1. contingent on - determined by conditions or circumstances that follow; "arms sales contingent on the approval of congress" contingent upon, dependant on, dependant upon, dependent on, dependent upon, depending on, contingent Prialt achieving revenue related milestones in Europe. Included in the net gain in the first quarter of 2005 is $42.0 million of consideration related to the divestment of Zonegran to Eisai in April 2004. Net Interest and Investment Gains and Losses Net interest and investment losses were $25.1 million for the first quarter of 2006, compared to net interest and investment losses of $40.5 million for the same period of 2005. In the first quarter of 2006, net interest expense amounted to $27.4 million, compared to $36.0 million in the same period of 2005. Net interest expense decreased in the first quarter of 2006 over the corresponding period in 2005 primarily as a result of interest savings due to the early retirements of $206.0 million of convertible debt and $36.8 million of the senior notes in June 2005, and higher interest income earned on cash balances due to increased interest rates. Research & Development Tysabri (Natalizumab) Tysabri - U.S. On March 8, 2006, the Peripheral and Central Nervous System Drugs Advisory Committee of the U.S. Food and Drug Administration (FDA FDA abbr. Food and Drug Administration FDA, n.pr See Food and Drug Administration. FDA, n.pr the abbreviation for the Food and Drug Administration. ) voted unanimously to recommend reintroduction Noun 1. reintroduction - an act of renewed introduction intro, introduction, presentation - formally making a person known to another or to the public of Tysabri as a treatment for relapsing relapsing /re·laps·ing/ (re-lap´sing) (re´lap-sing) recurrent; denoting an illness that is characterized by periods of remission alternating with attacks of symptomatic disease. forms of multiple sclerosis multiple sclerosis (MS), chronic, slowly progressive autoimmune disease in which the body's immune system attacks the protective myelin sheaths that surround the nerve cells of the brain and spinal cord (a process called demyelination), resulting in damaged areas (MS). Elan and Biogen Idec Biogen Idec, Inc. (NASDAQ: BIIB) is a biotechnology company specializing in drugs for neurological disorders, autoimmune disorders and cancer. The company was formed in 2003 by the merger of Cambridge, Massachusetts-based Biogen and San Diego, California-based Idec , Inc. (Biogen Idec) anticipate action by the FDA regarding the reintroduction of Tysabri in the U.S. on or before June 28, 2006. On March 29, 2006, the companies announced they enrolled and dosed the first patients in the Tysabri monotherapy monotherapy /mono·ther·a·py/ (-ther´ah-pe) treatment of a condition by means of a single drug. mon·o·ther·a·py n. Treatment of a disorder with a single drug. safety extension study program in MS. Patients who previously participated in the Phase 3 MS trials and subsequent safety evaluation are eligible to be screened for entry in this open label multi-centre study. Sites throughout Europe, the United States, Canada, Australia, New Zealand New Zealand (zē`lənd), island country (2005 est. pop. 4,035,000), 104,454 sq mi (270,534 sq km), in the S Pacific Ocean, over 1,000 mi (1,600 km) SE of Australia. The capital is Wellington; the largest city and leading port is Auckland. and Israel are expected to enroll patients. On April 6, 2006, the companies announced that in Phase 3 MS studies Tysabri showed significant effects on pre-specified health-related quality of life (QoL) measures, in addition to those previously reported on disability progression, relapse rate and MRI 1. (application) MRI - Magnetic Resonance Imaging. 2. MRI - Measurement Requirements and Interface. . Data presented at the annual meeting of the American Academy of Neurology The American Academy of Neurology (AAN) is a professional society for neurologists and neuroscientists. As a medical specialty society it was established in 1949 by A.B. Baker of the University of Minnesota to advance the art and science of neurology, and thereby promote the best in San Diego San Diego (săn dēā`gō), city (1990 pop. 1,110,549), seat of San Diego co., S Calif., on San Diego Bay; inc. 1850. San Diego includes the unincorporated communities of La Jolla and Spring Valley. Coronado is across the bay. , CA also showed a significant impact on additional pre-specified measures of disability progression, including visual and cognitive function cognitive function Neurology Any mental process that involves symbolic operations–eg, perception, memory, creation of imagery, and thinking; CFs encompasses awareness and capacity for judgment . Tysabri - Europe On April 28, 2006, Elan and Biogen Idec announced that the Committee for Medicinal Products for Human Use “CHMP” redirects here. For French language Canadian radio station, see CHMP-FM. CPMP, Committee for Proprietary Medicinal Products, now CHMP Committee for Medicinal Products for Human Use (CHMP CHMP Committee for Medicinal Products for Human Use CHMP Cultural Heritage Management Plan CHMP Centrale Humanitaire Médico-Pharmaceutique CHMP Certified Hazardous Materials Practitioner (Institute of Hazardous Materials Managers) ), the scientific committee of the European Medicines Agency The European Medicines Agency (EMEA) is a European agency for the evaluation of medicinal products. Until 2004, the European Medicines Agency was known as The European Agency for the Evaluation of Medicinal Products. Roughly parallel to the U.S. (EMEA (Europe, Middle East, Africa) Refers to that region of the world. For example, one might see products packaged differently for the UK, EMEA and Asia Pacific markets. ), issued a positive opinion recommending marketing authorization The right or permission to use a system resource; the process of granting access. See access control. for Tysabri as a treatment for relapsing-remitting Relapsing-remitting A pattern of symptoms of multiple sclerosis in which symptomatic attacks occur that last 24 hours or more, followed by complete or almost complete improvement. Mentioned in: Multiple Sclerosis MS to delay the progression of disability and reduce the frequency of relapses. The Committee recommended that Tysabri be used as single disease modifying therapy either in patients with highly active relapsing-remitting MS who have failed to respond to treatment with a beta-interferon beta-interferon n. A family of glycoproteins that are produced by fibroblasts, have antiviral properties, and are used in the treatment of multiple sclerosis. , or in patients who have rapidly evolving severe relapsing-remitting MS. The CHMP's positive recommendation for Tysabri will be considered for final marketing approval by the European Commission European Commission, branch of the governing body of the European Union (EU) invested with executive and some legislative powers. Located in Brussels, Belgium, it was founded in 1967 when the three treaty organizations comprising what was then the European Community . Final approval customarily follows the CHMP's recommendation, which the companies anticipate will be this summer. The European Commission is the final decision-making decision-making, n the process of coming to a conclusion or making a judgment. decision-making, evidence-based, n a type of informal decision-making that combines clinical expertise, patient concerns, and evidence gathered from body for all centrally-reviewed medicinal products medicinal product, n a substance administered to humans or animals through injection, application, oral ingestion, inhalation, and so forth, whose purpose is to ultimately restore health or eliminate disease in an individual. that are to be introduced in the EU market. Tysabri - Crohn's Disease Crohn's disease: see colitis. The results from the Phase 3 ENCORE (Encore Real Time Computing, Inc., Melbourne, FL, www.encore.com) A computer company founded as Encore Computer Corporation in 1983 that specialized in real time systems. Encore was known for its unique Reflective Memory channel, a high-speed interconnect for up to 255 systems. trial in Crohn's disease will be presented at Digestive Disease All diseases that pertain to the gastrointestinal tract are labelled as digestive diseases. This includes diseases of the esophagus, stomach, first, second and third part of the duodenum, jejunum, ileum, the ileo-cecal complex, large intestine (ascending, transverse and descending Week in Los Angeles Los Angeles (lôs ăn`jələs, lŏs, ăn`jəlēz'), city (1990 pop. 3,485,398), seat of Los Angeles co., S Calif.; inc. 1850. on May 23, 2006. Alzheimer's and other Neurodegenerative Diseases neurodegenerative diseases diseases characterized by neurodegeneration. Lesions are microscopic only but in chronic disease with massive involvement there may be grossly visible atrophy of affected nervous tissue. Elan is focused on building upon its breakthrough research and extensive experience in Alzheimer's disease Alzheimer's disease (ăls`hī'mərz, ôls–), degenerative disease of nerve cells in the cerebral cortex that leads to atrophy of the brain and senile dementia. (AD) and is also studying other neurodegenerative diseases, such as Parkinson's disease Parkinson's disease or Parkinsonism, degenerative brain disorder first described by the English surgeon James Parkinson in 1817. When there is no known cause, the disease usually appears after age 40 and is referred to as Parkinson's disease. . Elan is continuing to progress its own internal Gamma and Beta secretase β-secretase — also called BACE1 (β-site of APP cleaving enzyme) or memapsin-2 — is an aspartic-acid protease important in the pathogenesis of Alzheimer's disease, and in the formation of myelin sheaths in peripheral nerve Alzheimer's programs. Two of our compounds from our Alzheimer's disease immunotherapy Immunotherapy The treatment of cancer by improving the ability of a tumor-bearing individual (the host) to reject the tumor immunologically. There are molecules on the surface of tumor cells, and perhaps in their interior, that are recognized as different from program, AAB-001 and ACC-001, in collaboration with Wyeth, are currently progressing through clinical trials. AAB-001 The Phase 2 clinical trials phase 2 clinical trial Phase 2 study. See Phase study. for AAB-001, a humanized monoclonal antibody monoclonal antibody, an antibody that is mass produced in the laboratory from a single clone and that recognizes only one antigen. Monoclonal antibodies are typically made by fusing a normally short-lived, antibody-producing B cell (see immunity) to a fast-growing to A-beta, are progressing as planned. Interim analyses of Phase II data from AAB-001 will be made in the second half of this year to determine the time point at which this program can move into the next phase of clinical trials. The Phase 1 data from AAB-001 was presented on April 20, 2006, at the 9th Annual Geneva Geneva, canton and city, Switzerland Geneva (jənē`və), Fr. Genève, canton (1990 pop. 373,019), 109 sq mi (282 sq km), SW Switzerland, surrounding the southwest tip of the Lake of Geneva. Springfield Symposium symposium In ancient Greece, an aristocratic banquet at which men met to discuss philosophical and political issues and recite poetry. It began as a warrior feast. Rooms were designed specifically for the proceedings. on Advances in Alzheimer's Therapy. The objective of the study was to determine the safety and tolerability tol·er·a·ble adj. 1. Capable of being tolerated; endurable. 2. Fairly good; passable. See Synonyms at average. tol of single doses of AAB-001 in 30 patients with mild to moderate Alzheimer's disease. While this small study was designed to assess safety, the Mini-Mental State examination The mini-mental state examination (MMSE) or Folstein test is a brief 30-point questionnaire test that is used to assess cognition. It is commonly used in medicine to screen for dementia. (MMSE MMSE Mini Mental State Examination MMSE Minimum Mean Squared Error MMSE Mini-Mental Status Examination MMSE Multiuse Mission Support Equipment MMSE Multimission Support Equipment MMSE Multi Media Service Environment ) was also administered at regular intervals, week 16 being the primary time point at which efficacy would be analyzed. MMSE is a test that assesses the cognitive status of patients. The efficacy results showed that at week 16, MMSE was statistically significantly improved compared with placebo placebo (pləsē`bō), inert substance given instead of a potent drug. Placebo medications are sometimes prescribed when a drug is not really needed or when one would not be appropriate because they make patients feel well taken care of. at the 1.5 mg/kg dose of AAB-001 (6 active patients versus 8 placebo patients), the treatment difference relative to placebo favored the treated group at the 0.5 mg/kg dose group (6 active, 8 placebo) and there was no difference in MMSE change relative to placebo for the 5.0 mg/kg group (10 active, 8 placebo). The safety results showed that the highest single infusion dose of 5 mg/kg was associated with MRI FLAIR (language) FLAIR - An early system on the IBM 650. [Listed in CACM 2(5):16 (May 1959)]. abnormalities in 3 out of 10 patients which resolved in all three cases by 12 weeks post-dose. At that time the 5 mg/kg dose was stopped. ACC-001 The Phase 1 trials for ACC-001 (active Abeta immunotherapeutic im·mu·no·ther·a·py n. pl. im·mu·no·ther·a·pies Treatment of disease by inducing, enhancing, or suppressing an immune response. im conjugate conjugate /con·ju·gate/ (kon´jdbobr-gat) 1. paired, or equally coupled; working in unison. 2. a conjugate diameter of the pelvic inlet; used alone usually to denote the true conjugate diameter; see ) are progressing as planned. Interim analyses of the Phase 1 data will be made this year to determine the time point at which this program can move into Phase 2. About Elan Elan Corporation (NYSE NYSE See: New York Stock Exchange : ELN Noun 1. ELN - a Marxist terrorist group formed in 1963 by Colombian intellectuals who were inspired by the Cuban Revolution; responsible for a campaign of mass kidnappings and resistance to the government's efforts to stop the drug trade; "ELN kidnappers target ), plc is a neuroscience-based biotechnology company. We are committed to making a difference in the lives of patients and their families by dedicating ourselves to bringing innovations in science to fill significant unmet un·met adj. Not satisfied or fulfilled: unmet demands. medical needs that continue to exist around the world. Elan shares trade on the New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of , London and Dublin Stock Exchanges. For additional information about the company, please visit http://www.elan.com. Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. This document contains forward-looking statements about Elan's financial condition, results of operations, business prospects and products in research that involve substantial risks and uncertainties. You can identify these statements by the fact that they use words such as "anticipate", "estimate", "project", "target", "intend", "plan", "believe" and other words and terms of similar meaning in connection with any discussion of future operating or financial performance or events. Among the factors that could cause actual results to differ materially from those described or projected herein are the following: whether and when Elan will be able to resume marketing and developing Tysabri, even if Elan can resume marketing and developing Tysabri, the potential of Tysabri and the potential for the successful development and commercialization of additional products, including those utilizing Tysabri; the potential of Elan's current products; Elan's ability to maintain sufficient cash, liquid resources, and investments and other assets other assets Assets of relatively small value. For financial reporting purposes, firms frequently combine small assets into a single category rather than listing each item separately. capable of being monetized to meet its liquidity requirements; 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 products; the ability to successfully market both new and existing products; difficulties or delays in manufacturing and supply of Elan's products (including, in particular Maxipime); trade buying patterns; the impact of generic and branded competition after the expiration EXPIRATION. Cessation; end. As, the expiration of, a lease, of a contract, or statute. 2. In general, the expiration of a contract puts an end to all the engagements of the parties, except to those which arise from the non- fulfillment of obligations created of Elan's patents, including the impact of any generic competition following the loss of patent exclusivity for Azactam in October 2005; whether restrictive covenants Restrictive covenants Provisions that place constraints on the operations of borrowers, such as restrictions on working capital, fixed assets, future borrowing, and payment of dividends. in Elan's debt obligations will adversely affect Elan; the trend towards managed care and health care cost containment cost containment, n the features of a dental benefits program or of the administration of the program designed to reduce or eliminate certain charges to the plan. , including Medicare and Medicaid Medicare and Medicaid U.S. government programs in effect since 1966. Medicare covers most people 65 or older and those with long-term disabilities. Part A, a hospital insurance plan, also pays for home health visits and hospice care. ; the potential impact of the Medicare Medicare, national health insurance program in the United States for persons aged 65 and over and the disabled. It was established in 1965 with passage of the Social Security Amendments and is now run by the Centers for Medicare and Medicaid Services. Prescription Drug prescription drug Prescription medication Pharmacology An FDA-approved drug which must, by federal law or regulation, be dispensed only pursuant to a prescription–eg, finished dose form and active ingredients subject to the provisos of the Federal Food, Drug, , Improvement and Modernisation Act 2003; possible legislation affecting pharmaceutical pricing and reimbursement Reimbursement Payment made to someone for out-of-pocket expenses has incurred. , both domestically and internationally; failure to comply with kickback The seller's return of part of the purchase price of an item to a buyer or buyer's representative for the purpose of inducing a purchase or improperly influencing future purchases. and false claims laws including in respect to past practice related to the marketing of Zonegran; failure to comply with Elan's payment obligations under Medicaid and other governmental programs; exposure to product liability and other types of lawsuits and legal defense costs and the risks of adverse decisions or settlements related to product liability, patent protection, governmental investigations and other legal proceedings All actions that are authorized or sanctioned by law and instituted in a court or a tribunal for the acquisition of rights or the enforcement of remedies. ; Elan's ability to protect its patents and other intellectual property; claims and concerns that may arise regarding the safety or efficacy of Elan's products or product candidates; interest rate and foreign currency exchange rate fluctuations; governmental laws and regulations affecting domestic and foreign operations, including tax obligations; general changes in U.S. and International generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting ; 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 Form 20-F for the fiscal year ended December 31, 2005, and in its Reports of Foreign Issuer on Form 6-K filed with the SEC. Elan assumes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. Elan continually con·tin·u·al adj. 1. Recurring regularly or frequently: the continual need to pay the mortgage. 2. evaluates its liquidity requirements, capital needs and availability of resources in view of, among other things, alternative uses of capital, debt service requirements, the cost of debt and equity capital and estimated future operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. . Elan may raise additional capital, restructure or refinance Refinance 1. When a business or person revises their payment schedule for repaying debt. 2. Replacing an older loan with a new loan offering better terms. Notes: When a business refinances they typically extend the maturity date. outstanding debt, repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. material amounts of outstanding debt, consider the sale of products, interests in subsidiaries, marketable Marketable are securities that can be easily converted into cash. Such securities will generally have highly liquid markets allowing the security to be sold at a reasonable price very quickly. investment securities or other assets, or take a combination of such actions or other steps to increase or manage its liquidity and capital resources. Any such actions or steps, including any sale of assets or repurchase of outstanding debt, could be material. In the normal course of business, Elan may investigate, evaluate, discuss and engage in future company or product acquisitions, capital expenditures, investment and other business opportunities. In the event of any future acquisitions, capital expenditures, investment or other business opportunities, Elan may consider using available cash or raising additional capital, including the issuance of additional debt.
Elan First Quarter 2006 Financial Results
Appendix I
Three Months Ended Three Months Ended
March 31, 2005 March 31, 2006
Rest of Rest of
Tysabri Business Total Tysabri Business Total
(1) (1) (1) (1) (1) (1)
US$m US$m US$m US$m US$m US$m
----------------------------------------------------------------------
Revenue
12.9 82.5 95.4 Product revenue (0.1) 128.3 128.2
2.0 5.3 7.3 Contract revenue 0.7 5.4 6.1
-------- --------- ------ ------- --------- ------
14.9 87.8 102.7 Total revenue 0.6 133.7 134.3
-------- --------- ------ ------- --------- ------
Operating Expenses
Cost of goods
25.3 37.7 63.0 sold(2) 0.7 47.1 47.8
Selling,
general and
30.8 71.8 102.6 administrative(3) 16.1 62.3 78.4
Research and
17.4 38.5 55.9 development 5.2 41.3 46.5
Net gain on
divestment of
products and
-- (44.1) (44.1) businesses -- (44.2) (44.2)
-------- --------- ------ ------- --------- ------
Total operating
73.5 103.9 177.4 expenses 22.0 106.5 128.5
-------- --------- ------ ------- --------- ------
Operating
(58.6) (16.1) (74.7) (loss)/profit (21.4) 27.2 5.8
Depreciation and
0.5 34.0 34.5 amortization 0.7 31.9 32.6
(2.0) (9.6) (11.6) Amortized fees (0.7) (10.7) (11.4)
Net gain on
divestment of
products and
-- (44.1) (44.1) businesses -- (44.2) (44.2)
-------- --------- ------ ------- --------- ------
(60.1) (35.8) (95.9) Adjusted EBITDA (21.4) 4.2 (17.2)
======== ========= ====== ======= ========= ======
(1) Excludes share-based compensation.
(2) Cost of goods sold for Tysabri for the first quarter of 2005
includes $14.0 million of inventory written-off related to the
voluntary suspension of the marketing of Tysabri.
(3) General and corporate costs have not been allocated to Tysabri.
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