Shares in Elan fell more than 25 per cent today as investors digested news that the company would take a $542 million charge in the third quarter and warned of a sharp downturn in revenues.
Elan said last night it would take combined charges of up to $542 million in the third quarter, blaming asset sales and a weak investment portfolio.
Elan, which has lost about 95 per cent of its market value this year, announced the $400 million charge in a statement and said it would take a $142 million cash charge due to asset sales.
The drug maker also expects revenue to drop to $200 million, compared to $375 million in the 2002 second quarter. Elan attributed that fall in part to generic rivals for its Zanaflex drug and product supply issues.
Elan said it suffered in its investments where it is heavily weighted in the weak biotech sector.
The company, which is struggling to repay debts, was buoyed last week by market speculation about a possible takeover by Bristol-Myers Squibb .