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Article Excerpt
Business Editors
DUBLIN, Ireland--(BUSINESS WIRE)--Oct. 30, 2002
Elan Reports Third Quarter 2002 Financial Results
and Recovery Plan Update
Third quarter financial highlights
- Total revenue of $340.0 million in the third quarter of 2002
compared to $484.3 million in the third quarter of 2001.
- Total product revenue of $219.9 in the third quarter of 2002 compared to $381.0 million in the third quarter of 2001. - Net loss of $60.7 million for the third quarter of 2002, or a loss per share of $0.17, before other charges of $943.1 million. Including other charges, net loss of $1,003.8 million for the third quarter of 2002, or a loss of $2.87 per share. - Cash balances at September 30, 2002 were $632.9 million.
Recovery plan highlights (July 31, 2002 to date)
- Pro-forma cash balances will be in excess of $1.0 billion
after including cash proceeds of $420 million from
Abelcet(TM)and Actiq(TM)upon the closing of these
transactions.
- Aggregate cash proceeds from asset divestitures in excess of
$460 million.
- Targeted headcount reduction of 1,000 by year-end 2002 70%
complete.
R&D Update
- Antegren(TM) and Prialt(TM), the most advanced pipeline
programs in Phase 3, and Alzheimer's programs are progressing
as targeted in the recovery plan.
- Expect to file four New Drug Applications ("NDAs") by the end
of 2004 and up to five Investigational New Drug Applications
("INDs") by the end of 2003 as targeted in the recovery plan.
Introduction
Elan Corporation, plc (NYSE: ELN) ("Elan") today announced a net loss of $1,003.8 million, after other charges, for the third quarter of 2002 ($2.87 loss per share) compared to net income of $128.6 million, after other charges, for the third quarter of 2001 ($0.35 earnings per diluted share).
Losses, before other charges of $943.1 million, amounted to $60.7 million or $0.17 per share in the third quarter of 2002. Total other charges, which include non-cash charges of approximately $773 million, arose primarily from investment related charges, an intangible asset write-down and other costs associated with the implementation of the recovery plan.
"I am pleased to report that the recovery plan is proceeding as outlined on July 31, 2002," stated Dr Garo Armen, Elan's Chairman. "I am confident that we will reach our divestiture targets with greater realisations of cash and ahead of schedule. In addition, we remain focused on our very important research and development efforts, which are progressing according to plan."
The following analysis is based on the pro-forma income statement data excluding other charges set out on page 17.
Revenue
Total revenue decreased to $340.0 million in the third quarter of 2002 from $484.3 million in the third quarter of 2001 and from $456.1 million in the second quarter of 2002.
Total revenue can be further analysed as follows: 3 months ended 3 months ended 3 months ended September 30, June 30, September 30, 2001 2002 2002 US$m US$m US$m (a) Product Revenue Product sales 243.2 325.0 211.3 Rationalisation revenue 116.2 34.6 8.6 Pharma Marketing/ Autoimmune 21.6 15.1 - --------- ------------- --------------- Total product revenue 381.0 374.7 219.9 --------- ------------- --------------- (b) Contract Revenue Amortisation of fees 68.9 50.0 101.3 Research revenue and milestones 19.2 16.9 18.8 Pharma Marketing/ Autoimmune 15.2 14.5 - --------- ------------- --------------- Total contract revenue 103.3 81.4 120.1 --------- ------------- --------------- Total Revenue 484.3 456.1 340.0 --------- ------------- ---------------
(a) Product Revenue
Product revenue for the third quarter of 2002 was $219.9 million representing a decrease of 42% when compared to the third quarter of 2001. While prescriptions for Elan's principal products (including Skelaxin(TM), Sonata(TM) and Zonegran(TM)) continued to grow, the reduction in product revenues compared to the second quarter of 2002 was principally due to the genericization of Zanaflex(TM), the reduction in product rationalisation revenue and the termination of the arrangements with Autoimmune Research and Development Corp Ltd. ("Autoimmune"). The remaining reduction is attributable to a change in Elan's discounting strategy, short-term product supply problems due to third party manufacturing constraints and the asset divestiture program.
In the third quarter of 2002, prescriptions for Skelaxin, Sonata and Zonegran increased by 13%, 1% and 87%, respectively, over the third quarter of 2001. Regarding Elan's hospital products, demand for Maxipime(TM) is strong and continues to grow, with audited sales volumes in the two months ended August 2002, 42% higher than the same period in 2001 and 47% higher in the eight months ended August 2002 compared with the same period in 2001. Audited sales volumes for Azactam(TM) in the two months ended August 2002 were 3% higher than the same period in 2001 and similar in the eight months ended August 2002 compared with the same period in 2001. Myobloc(TM)/Neurobloc(TM) global product sales were $3.8 million in the third quarter of 2002 compared to $3.1 million in the third quarter of 2001.
Although prescriptions increased by 87%, Zonegran revenues were $9.6 million, 41% lower than the third quarter of 2001 due to the change in Elan's discounting strategy and the resulting reduction in wholesaler inventories. Revenues for the nine months ended September 30, 2002 from Zonegran were 30% higher than in the same period in 2001. Frova(TM), which was launched in the second quarter of 2002 by the combined Elan and UCB sales forces, generated revenues of $0.9 million in the third quarter of 2002 following revenues of $6.2 million in the second quarter of 2002, which reflected stocking of the wholesale channel ahead of launch.
The reduction in product revenues for the quarter of $154.8 million compared to the second quarter of 2002 is as...
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