Elan Reports Third Quarter 2006 Financial Results.DUBLIN, Ireland -- Elan Corporation, plc (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 ) today announced its third quarter 2006 financial results. Commenting on Elan's business, Kelly Martin, Elan's president and chief executive officer, said, "The third quarter provided further evidence of progress in key areas. We are encouraged by the initial results in the relaunch Relaunch can refer to several things:
adj. Of, relating to, causing, or characterized by degeneration. Degenerative Degenerative disorders involve progressive impairment of both the structure and function of part of the body. nature of this disease, we remain confident that Tysabri will play a significant role in the treatment of MS moving forward. We plan to file for Crohn's in the U.S. by the end of this year. In our scientific pipeline, we recently announced a new collaboration in the area of Alzheimer's with Transition Therapeutics and are working together to advance this Phase 1 small molecule program. We are pleased to report that we have started dosing patients with ELND-001, an oral compound from our autoimmune program." Mr Martin added, "We remain focused on maintaining a disciplined approach in all areas of our business and on advancing our pipeline in order to enable patients to choose from a range of therapeutically relevant choices that may meet their unmet medical needs." Commenting on Elan's third 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). , Elan's executive vice president and chief financial officer, said, "We are pleased with the overall outcome for the third quarter. We successfully launched Tysabri for MS in a number of EU countries and re-introduced it in the US, marking an important step in our drive towards a return to profitability. License fees payable in relation to the expansion of our pipeline of innovative Alzheimer's therapeutics together with temporary supply shortages of Maxipime impacted our third quarter results and led to increased losses." Mr. Cooke added, "We are confident that revenues for 2006, excluding any revenues from Tysabri, will exceed $500 million. We also expect 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 losses for the year to be less then previously guided due to solid revenue growth and improved operating margins, and we look forward to the future with confidence and enthusiasm." [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] Net Loss The net loss for the third quarter of 2006 amounted to $117.0 million, compared to $67.1 million reported in the same quarter of 2005. The increase in net loss is principally due to a gain of $23.0 million on the sale of Zonegran[TM] in 2005, the inclusion of share-based compensation expense of $10.9 million in 2006 for the first time, and a $15.0 million license fee payable to Transition Therapeutics, Inc. (Transition) relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the novel 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. therapeutic agent, AZD-103. The net loss for the nine months ended September 30, 2006 was $240.8 million, a reduction of 26% over the same period in 2005. The reduction in net loss is principally due to improved operating margins and reduced net interest and debt retirement costs, partially offset by share-based compensation, the license fees associated with research and development collaborations with Archemix, Inc. and Transition entered into in 2006 and gains on the sale of Zonegran in 2005. 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 compensation to be measured at fair value and expensed over the requisite service period. The adoption of SFAS 123R resulted in a charge for share-based compensation of $10.9 million for the third 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 , $7.5 million of selling, general and administrative (SG&A) expense, and $2.3 million of research and development (R&D) expense. For the nine months ended September 30, 2006, this charge was $37.1 million, which is comprised of $3.3 million of cost of goods sold, $22.9 million of SG&A expenses and $10.9 million of R&D expenses. Adjusted EBITDA 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 4. A further analysis of Adjusted EBITDA between Tysabri[TM] and the rest of the business is included in Appendices I and II. Negative Adjusted EBITDA was $41.7 million in the third quarter of 2006, compared to $42.1 million in the third quarter of 2005, and includes negative Adjusted EBITDA of $28.7 million related to Tysabri (2005: $36.7 million). The improvement in negative Adjusted EBITDA related to Tysabri reflects the remarketing of Tysabri in the US and launch in the EU in 2006, and lower R&D expenses following the completion of the Tysabri safety evaluation in 2005. Negative Adjusted EBITDA in the third quarter of 2006 for the rest of the business, excluding costs related to Tysabri, was $13.0 million (2005: $5.4 million). The increase in negative Adjusted EBITDA for the rest of the business reflects principally a reduction in revenue from Maxipime(TM) due to temporary supply shortages from a third party supplier. Supply has been resumed and we continue to monitor the situation closely. Negative Adjusted EBITDA was $81.9 million for the nine months ended September 30, 2006, compared to $196.7 million in the same period of 2005 and includes $78.1 million related to Tysabri (2005: $135.0 million), a reduction of 42%. The improvement in negative Adjusted EBITDA related to Tysabri reflects the inclusion in 2005 of the costs of the voluntary suspension of Tysabri in February 2005, together with the costs of the subsequent safety evaluation. Negative Adjusted EBITDA for the rest of the business for the first nine months of 2006 was $3.8 million, a reduction of 94% from the $61.7 million in the same period in 2005. This improvement reflects the 18% increase in revenues, together with ongoing cost discipline with reduced aggregate SG&A and R&D expenses. Revenue Total revenue decreased to $123.3 million in the third quarter of 2006 from $128.6 million in the third quarter of 2005. The decrease reflects principally a reduction in revenue from Maxipime due to temporary supply shortages from a third party supplier. In the first nine months of 2006, total revenue increased 13% to $394.0 million from $349.9 million in the same period of 2005. This increase reflects a 14% improvement in product revenue principally due to increased demand. Revenue is analyzed below between product revenue and contract revenue. [TABLE OMITTED] Revenue from marketed products Tysabri 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) received approval from the US 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. ) in June 2006 to re-introduce Tysabri for the treatment of relapsing forms of multiple sclerosis (MS). Approval for the marketing of Tysabri in the EU was also received in June 2006. In October 2006, approval was received for the marketing of Tysabri in Canada. The distribution of Tysabri in both the US and EU commenced in July 2006. Global in-market net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight of Tysabri in the third quarter of 2006 were $8.1 million, $5.4 million in the US and $2.7 million in the EU. The analysis of the operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. between Tysabri and the rest of the business is included in Appendices I and II. The focus of activities in the US since July 2006 has been on educating health care professionals in relation to the operation of the TOUCH prescribing program. This risk management program has been designed in cooperation with the FDA to ensure that Tysabri is made available to appropriate MS patients. Of the 2,000 to 2,500 physicians and infusion sites in the US that treat the majority of MS patients, to date approximately 1,000 have now been trained in the TOUCH program and more than 750 doctors have enrolled patients. We continue to focus on making Tysabri available to appropriate patients as quickly as possible. To date, approximately 4,500 patients in the US have enrolled in the TOUCH Program and of these, approximately 1,700 patients have received their first infusion. It is too early to determine how many patients who enroll in the TOUCH prescribing program will convert to patients infused. In the EU, Tysabri is now available in Germany, Sweden, the UK, Ireland, Denmark, the Netherlands, Austria, Finland and Norway. We are at various stages of discussions in relation to reimbursement in these countries. To date, approximately 500 to 600 patients in the EU have received infusions of Tysabri, mostly in Germany. Tysabri was developed and is now being marketed in collaboration with Biogen Idec, with costs and revenues shared approximately equally. Biogen Idec is responsible for manufacturing the product. In the US, Elan purchases Tysabri from Biogen Idec and is responsible for distribution. Consequently, Elan records as revenue the net sales of Tysabri in the US market. Elan purchases product from Biogen Idec as required at a price which includes the cost of manufacturing, plus Biogen Idec's share of the gross profit and this cost, together with royalties payable to other third parties, is included in cost of sales. During the third quarter of 2006, Elan recorded net sales of $5.4 million in the US market. In the EU market, Biogen Idec is responsible for distribution and Elan records as revenue its share of the profit or loss on EU sales. In the third quarter of 2006, Elan recorded negative revenue of $5.7 million, which was calculated as follows: [TABLE OMITTED] Other marketed products Revenue from Maxipime for the quarter decreased by 22% to $26.4 million from $33.8 million in the third quarter of 2005 due to temporary supply shortages. Supply has been resumed and we continue to monitor the situation closely. In the first nine months of 2006, revenue from Maxipime increased 22% to $113.7 million from $93.5 million in the same period of 2005 due to increased demand. Azactam revenue for the quarter decreased to $16.7 million from $17.0 million in the third quarter of 2005. In the first nine months of 2006, revenue from Azactam increased 41% to $56.6 million from $40.2 million in the same period of 2005 due to increased 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 form of Azactam product has been approved. Revenue from Prialt for the third quarter of 2006 was $3.1 million, compared to $1.5 million in the third quarter of 2005. Prialt was launched in the US market during the first quarter of 2005. In the first nine months of 2006, revenue from Prialt increased to $8.7 million from $4.3 million in the same period of 2005 due to increased demand. Manufacturing revenue 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 $58.1 million in the third quarter of 2006, compared to $56.4 million in the third quarter of 2005. In the first nine months of 2006, manufacturing revenue and royalties were $167.5 million, an increase of 13% over the same period in 2005. These revenues can be further analyzed as follows: [TABLE OMITTED] Except as noted above, no other product accounted for more than 10% of total manufacturing revenue and royalties in the third quarter of 2006 or 2005. Of the total of $58.1 million in manufacturing revenue and royalties in the third quarter 2006 (2005: $56.4 million), 43% (2005: 34%) consisted of royalties received on products that were not manufactured by Elan. In the first nine months of 2006, of the total of $167.5 million (2005: $148.8 million) in manufacturing revenue and royalties, 39% (2005: 33%) consisted of royalties on products that were not manufactured by Elan. Amortized product revenue The results for the third 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 CC and the restructuring of Elan's Avinza license agreement with Ligand Pharmaceuticals, Inc. which occurred in 2002. The remaining unamortized revenue on these products of $9.7 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. 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 58% in the third quarter of 2006, compared to 61% in the same period of 2005. The decrease was principally due to the change in the mix of sales. For the first nine months of 2006, the gross profit margin on product revenue was 61%, compared to 54% in the same period of 2005. The improvement is due principally to the change in the mix of product sales and the inclusion in 2005 of costs related to the voluntary suspension of Tysabri in the US. 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. Selling, general and administrative SG&A expenses increased 15% to $91.7 million (including $7.5 million of share-based compensation expense) in the third quarter of 2006 from $80.0 million (including $nil share-based compensation expense) in the same quarter of 2005 and can be analyzed as follows: [TABLE OMITTED] SG&A expenses related to the rest of the business, excluding depreciation, amortization and share-based compensation, increased by 7% to $49.1 million in the third quarter of 2006 from $45.9 million in the third quarter of 2005, principally due to the inclusion of $3.0 million related to the costs of settling certain legacy litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. . The SG&A expenses related to Tysabri, excluding amortization and share-based compensation, were $16.0 million in the third quarter of 2006, compared to $16.7 million in the third quarter of 2005. The SG&A expenses related to the Tysabri EU sales are reflected in the negative Tysabri EU revenue as described on page 10. In the first nine months of 2006, SG&A expenses relating to the rest of the business, excluding depreciation, amortization and share-based compensation, decreased 7% to $141.6 million from $151.9 million in the same period in 2005. Research and development R&D expenses were $54.1 million (including $2.3 million of share-based compensation expense) in the third quarter of 2006, compared to $60.3 million (including $nil of share-based compensation expense) in the same period of 2005. The decrease of 10% is primarily due to reduced expenses related to Tysabri, partially offset by the impact of expensing share-based compensation. Included in R&D expenses for the third quarter of 2006 is $9.3 million (including $0.3 million of shared-based compensation) related to Tysabri, compared to $19.4 million (including $nil of share-based compensation expense) in the same period in 2005. The decrease principally reflects the completion of the Tysabri safety evaluation in 2005. R&D expenses were $157.5 million (including $10.9 million of share-based compensation) in the first nine months of 2006, compared to $180.5 million (including $nil of share-based compensation expense) in the same period in 2005, a decrease of 13%. This reduction is principally due to the reduced expenses related to Tysabri following the completion of the safety evaluation in 2005, partially offset by the cost of expensing share-based compensation. Net Gains on Divestment of Products and Businesses There were no divestments of products and businesses in the third quarter of 2006 and the net gain of $43.3 million included for the first nine months of 2006 related to the sale of the European rights to Prialt in February 2006. The net gain of $23.3 million in the third quarter of 2005 and the net gain of $88.4 million included for the first nine months of 2005 related primarily to the divestment of Zonegran in April 2004. Other Net Charges Other net charges for the three and nine months ended September 30, 2006 and 2005 were as follows: [TABLE OMITTED] The $15.0 million in-process research and development charge in the third quarter 2006 is in respect of a license fee payable under the recently executed collaboration agreement with Transition (see page 17). A payment of $7.5 million will be made in the fourth quarter of 2006 and the remaining balance of $7.5 million is due to be paid in 2007. Net Interest and Investment Gains and Losses Net interest and investment losses decreased to $26.2 million in the third quarter of 2006 from $28.4 million in the same period of 2005, principally due to a net investment gain of $3.1 million in the third quarter of 2006. In the first nine months of 2006, net interest and investment losses decreased to $79.7 million from $157.5 million in the same period of 2005, principally due to a net charge of $52.2 million on the retirement of $242.8 million of debt in 2005, and a decrease in interest expense in 2006 as a result of the debt retirement. Financial Outlook 2006 In line with previous guidance, Elan expects total revenues, excluding revenues from Tysabri, to exceed $500.0 million. In addition, negative Adjusted EBITDA losses, excluding Tysabri revenue, are expected to be below the previous range of $150.0 million to $175.0 million. Research and Development Autoimmune Tysabri - MS ECTRIMS ECTRIMS European Committee for Treatment and Research in Multiple Sclerosis The Annual Congress of the European Committee for Treatment and Research in MS (ECTRIMS) was held in Madrid from September 27-30. A number of posters and presentations relating to Tysabri, including data on 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 and the sustained effect on relapse rate in patients with MS treated for up to three years were presented and published during the meeting. The following are some key highlights from the presentations: Cognitive function * Data demonstrated that treatment with Tysabri significantly reduced the risk of sustained cognitive worsening by 43%, compared to placebo, in patients with MS. Sustained effect on relapse rate * For approximately 250 patients who were on 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. for nearly three years, the Years, The the seven decades of Eleanor Pargiter’s life. [Br. Lit.: Benét, 1109] See : Time annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. relapse rate over the three year period was 0.23, translating into an average of one relapse every 4.3 years. This was consistent with the 0.23 annualized relapse rate seen in the two-year AFFIRM study, which represented a 68% relative reduction when compared to the two-year placebo annualized relapse rate of 0.73, as published in the New England Journal of Medicine The New England Journal of Medicine (New Engl J Med or NEJM) is an English-language peer-reviewed medical journal published by the Massachusetts Medical Society. It is one of the most popular and widely-read peer-reviewed general medical journals in the world. . Tysabri - Crohn's disease Crohn's disease: see colitis. In the US, we expect to file a Biologics License Application with the FDA for Tysabri in CD by the year-end. The Marketing Authorisation Application for Tysabri in CD is currently under review at the European regulatory agency regulatory agency Independent government commission charged by the legislature with setting and enforcing standards for specific industries in the private sector. The concept was invented by the U.S. . The Crohn's maintenance data presented at the United European Gastroenterology gastroenterology Medical specialty dealing with digestion and the digestive system. In the 17th century Jan Baptista van Helmont conducted the first scientific studies in the field; William Beaumont published his own observations in 1833. Week on October 24, 2006, will also be presented at the Annual American College of Gastroenterology The American College of Gastroenterology (ACG) is a Bethesda, Maryland-based medical association of gastroenterologists. The association was founded in 1932 and holds annual meetings and regional postgraduate continuing education courses, establishes research grants, meeting today, Wednesday, October 25, 2006. About Tysabri In the US, TYSABRI is approved as a monotherapy treatment for relapsing forms of MS. TYSABRI increases the risk of progressive multifocal leukoencephalopathy Progressive Multifocal Leukoencephalopathy Definition Progressive multifocal leukoencephalopathy (PML) is a rapidly progressive neuromuscular disease caused by opportunistic infection of brain cells (oligodendrocytes and astrocytes) by the JC virus (PML PML - Parallel ML. ["Synchronous Operations as First-Class Values", J.H. Reppy <jhr@research.att.com>, Proc SIGPLAN 88 Conf Prog Lang Design and Impl, June 1988, pp. 250-259]. ), an opportunistic viral infection viral infection, n an infection by a pathogenic virus. A virus acts on the cell nucleus, taking over the genetic material within the nucleus and replicating itself. of the brain that usually leads to death or severe disability. Patients should be monitored at regular intervals for any new or worsening signs or symptoms suggestive of suggestive of Decision making adjective Referring to a pattern by LM or imaging, that the interpreter associates with a particular–usually malignant lesion. See Aunt Millie approach, Defensive medicine. PML. Because of the increased risk of PML, TYSABRI is generally recommended for patients who have had an inadequate response to, or are unable to tolerate, alternate MS therapies. It is available in the US only through a restricted distribution program called the TOUCH Prescribing Program. According to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. product labeling, after two years, TYSABRI treatment led to a 67% relative reduction (p<0.001) in the annualized relapse rate compared to placebo and reduced the relative risk of disability progression by 42% (p<0.001). TYSABRI treatment also resulted in sustained and statistically significant reductions in brain lesion activity as measured by MRI 1. (application) MRI - Magnetic Resonance Imaging. 2. MRI - Measurement Requirements and Interface. . Changes in MRI findings often do not correlate with changes in the clinical status of patients (e.g., disability progression). The prognostic prog·nos·tic adj. 1. Of, relating to, or useful in prognosis. 2. Of or relating to prediction; predictive. n. 1. A sign or symptom indicating the future course of a disease. 2. significance of the MRI findings in these studies has not been evaluated. In the European Union European Union (EU), name given since the ratification (Nov., 1993) of the Treaty of European Union, or Maastricht Treaty, to the European Community , TYSABRI is indicated as a single disease-modifying therapy in highly active relapsing-remitting MS patients. Because of the increased risk of PML, it is for patients with high disease activity despite treatment with a beta-interferon or in patients with rapidly evolving severe relapsing-remitting MS. According to product labeling in the EU, after two years, TYSABRI treatment led to a 68% relative reduction (p<0.001) in the annualized relapse rate compared to placebo and reduced the relative risk of disability progression by 42-54% (p<0.001). Serious adverse events that occurred in TYSABRI-treated patients included hypersensitivity reactions hypersensitivity reactions, n.pl any of several forms of overly responsive actions of the immune system to normally encountered, antigens. Also called allergic reactions. (e.g., anaphylaxis anaphylaxis (ăn'əfəlăk`sĭs), hypersensitive state that may develop after introduction of a foreign protein or other antigen into the body tissues. ), infections, depression and gallstones Gallstones Definition A gallstone is a solid crystal deposit that forms in the gallbladder, which is a pear-shaped organ that stores bile salts until they are needed to help digest fatty foods. . In MS trials, the incidence and rate of other serious and common adverse events, including the overall incidence and rate of infections, were balanced between treatment groups. Herpes infections were slightly more common in patients treated with TYSABRI. Serious opportunistic and other atypical infections have been observed in TYSABRI-treated patients, some of whom were receiving concurrent immunosuppressants immunosuppressants, n.pl the agents that lower or reduce immune response; useful in organ transplant surgery to prevent organ rejection. Corticosteroid hormones given in large amounts; cytotoxic drugs, including antimetabolites and alkylating agents; . Common adverse events reported in TYSABRI-treated patients include headache, fatigue, infusion reactions, urinary tract infections urinary tract infection (UTI), n infection in one or more of the structures that make up the urinary system. Occurs more often in women and is most commonly caused by bacteria. , joint and limb pain, lower respiratory infections Noun 1. lower respiratory infection - infection of the lower respiratory tract respiratory infection, respiratory tract infection - any infection of the respiratory tract , rash, gastroenteritis gastroenteritis: see enteritis. gastroenteritis Acute infectious syndrome of the stomach lining and intestines. Symptoms include diarrhea, vomiting, and abdominal cramps. , abdominal discomfort, vaginitis vaginitis Inflammation of the vagina. The chief symptom is a whitish or yellowish vaginal discharge. Treatment depends on the cause: appropriate drugs for sexually transmitted diseases (often from Gardnerella bacteria or trichomonads) or yeast infections; estrogen cream for , and diarrhea. For more information about TYSABRI please visit www.tysabri.com, www.biogenidec.com or www.elan.com, or call 1-800-456-2255. ELND-001 Elan has a broad research program in the area of autoimmune diseases Autoimmune diseases A group of diseases, like rheumatoid arthritis and systemic lupus erythematosus, in which immune cells turn on the body, attacking various tissues and organs. Mentioned in: Complement Deficiencies, Premature Menopause . One of these programs is focused on delivering oral Alpha-4 inhibitors to diseases in this category. The first compound in this program, ELND-001, has commenced Phase 1 clinical trials phase 1 clinical trial Phase 1 study. See Phase study. and patients have recently received their first dose. The first indication for this compound is expected to be Rheumatoid Arthritis rheumatoid arthritis Chronic, progressive autoimmune disease causing connective-tissue inflammation, mostly in synovial joints. It can occur at any age, is more common in women, and has an unpredictable course. . Alzheimer's Disease 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 (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 AD immunotherapy program, Bapineuzumab (AAB-001) and ACC-001, in collaboration with Wyeth, are progressing through clinical trials. Bapineuzumab (AAB-001) Bapineuzumab (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, is currently in Phase 2 clinical trials phase 2 clinical trial Phase 2 study. See Phase study. . Interim analysis of the Phase 2 data will be made by the end of this year to determine the time point at which this program can move into the next phase of clinical trials. ACC-001 ACC-001 (active Abeta immunotherapeutic 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 ) is currently in Phase 1 clinical trials. We expect to move this program into Phase 2 clinical trials by the end of the year. Elan and Transition Therapeutics Collaboration On September 27, 2006, Elan and Transition, announced an exclusive, worldwide collaboration agreement for the joint development and commercialization of a novel therapeutic agent, AZD-103, for the treatment of Alzheimer's disease. AZD-103 is a small molecule compound in Phase 1 clinical development that acts by breaking down and preventing the assembly of beta amlyoid fibrils, a hallmark pathology of Alzheimer's disease. About Elan Elan Corporation (NYSE: ELN), plc is a neuroscience-based biotechnology company committed to making a difference in the lives of patients and their families by dedicating itself to bringing innovations in science to fill significant unmet 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 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: the potential of Tysabri, the incidence of serious adverse events associated with Tysabri (including cases of PML) and the potential for the successful development and commercialization of additional products, including those utilizing Tysabri; the potential of Elan's other marketed 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 including, in particular, whether the Phase 2 clinical trials for AAB-001 and the Phase 1 clinical trials for ACC-001 are successful 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 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 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, 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 US 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 Annual Report on 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 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 outstanding debt, repurchase material amounts of outstanding debt, consider the sale of products, interests in subsidiaries, marketable 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 Third Quarter 2006 Financial Results Appendix I [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] |
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