Upbeat Elan records positive results

Elan has posted encouraging results for the second quarter of the year and offered upbeat guidance on its product pipeline.

The pharmaceutical firm, which escaped a crippling debt default when it filed annual accounts earlier this month, recorded total sales of $245.5 million (€217.5 million) in the second quarter, down 46 per cent on the same months of 2002.

When divested products are excluded from the numbers however, sales were 7 per cent ahead at $148.4 million.

This also excludes revenues for spasticity drug, Zanaflex, which dropped from $64.1 million to $0.2 million on the back of previously-flagged strong generic competition.

When continuing operations are taken alone, Elan moved into the black in the quarter, swapping a $717.7 million pre-tax loss in the second-quarter of 2002 for a $22.4 million pre-tax profit in the same period of this year.

Operating losses were slashed by 95 per cent to $8.7 million over the same period.

Analysts welcomed the numbers, finding within them little in the way of surprise.

Commentators were particularly heartened by news of progress on the drug company's Alzheimer's drug development programme, which could move into a trial stage before the end of the year.

Elan also offered some grounds for optimism on its trial of Antegren for Crohn's Disease, which failed to meet the company's targets in clinical trials earlier this year.

Merrion Stockbrokers analyst Mr Peter Frawley said data on the trial for the drug, which is due to be presented next month, will be of crucial significance for investors in Elan since the drug offers most potential for future growth.

Shares in Elan fell victim to profit-taking after the numbers were published, dropping 14 cents to €5.38.

In New York, where the stock is mainly traded, it closed at $6.07 1 cent up on its previous closing price.

Elan president and chief executive, Mr Kelly Martin, said the second-quarter results were characterised by "solid progress" within the firm, which has been engaged in a radical recovery programme for more than a year.

Since this process began, the company has raised $1.7 billion through the sale of assets, with Mr Martin projecting that further assets, worth between $300 million and $400 million, would be sold off before the end of the year.

Elan has also been engaged in stringent cost reduction, reporting yesterday that overhead costs had fallen from $180.9 million to $120.4 million in the year to the end of June.

Goodbody Stockbrokers analyst Mr Ian Hunter suggested that costs should have been squeezed even more at this stage, but Mr Martin countered this by highlighting the "lumpy" nature of eliminating expenses.

"I think that we will see that number continue to drop in a significant way," he said.