Wednesday, neuroscience-based biotechnology company Elan Corp., Plc (ELN) posted a profit for the third quarter, reflecting a net gain related to Johnson & Johnson transaction as well as an improvement in operating performance. Quarterly revenues grew 6% from last year, boosted by a solid performance by its Biopharmaceuticals business. Further, the company said it remains 'on track' to deliver double-digit revenue growth for the full year.
Q3 Results
The Dublin, Ireland-based company's third-quarter net income was $52.3 million or $0.11 per share, compared to a loss of $83.5 million or $0.18 per share in the prior-year quarter.
On average, 5 analysts polled by Thomson Reuters expected the company to post a loss of $0.13 per share. Analysts' estimates typically exclude special items.
The company noted that the improvement of $135.8 million in the third quarter results principally reflect a $107.7 million net gain on divestment of the Alzheimer's Immunotherapy Program or AIP business to a subsidiary of Johnson & Johnson during the quarter, along with an improved operating performance, with the operating loss excluding this gain and other net charges decreasing by $29.8 million to $1.7 million in the third quarter of 2009 compared to $31.5 million in the third quarter of 2008.
Quarterly revenues advanced 6% to $287.0 million from $270.1 million reported in the comparable quarter of the previous year, and breezed past the $285.18 million consensus estimate of 5 analysts polled by Thomson Reuters.
Kelly Martin, Chief Executive Officer of Elan, commented, "The third quarter of 2009 proved to be a time of significant transformation for Elan. Completion of the Johnson & Johnson transaction and the subsequent refinancing of our balance sheet provide strategic flexibility and financial stability for the company."
Product revenue for the recent quarter was $283.7 million, an increase from $266.4 million a year earlier, while Contract revenue dropped to $3.3 million from $3.7 million in the third-quarter of fiscal 2008.
Business Segments
The company's Biopharmaceuticals business fetched third-quarter revenue of $217.8 million, up 10% from $198.9 million in the prior-year quarter, driven by a solid performance by Tysabri, more than offsetting reduced sales of Azactam and Maxipime.
During the recent quarter, Tysabri in-market net sales grew 19% to $281.6 million from $237.0 million for the same period of 2008, owing to strong patient demand across global markets. Azactam revenue fell 18% to $19.8 million from $24.2 million in 2008, primarily due to supply shortages, while Maxipime revenue plunged 68% to $1.8 million from $5.7 million last year, principally due to generic competition.
Revenue from the Elan Drug Technologies or EDT business declined by 3% to $69.2 million from $71.2 million in the previous year.
Other Metrics
Operating income for the latest quarter was $102.8 million, including a net gain on divestment of business of $107.7 million related to the sale of the AIP business as part of the Johnson & Johnson transaction. Excluding this net gain on divestment of business and other net charges, the operating loss for the third quarter of 2009 was $1.7 million, a decline of 95% from $31.5 million for the third quarter of 2008.
The company attributed the improvement in operating performance to a 6% rise in revenue and the resulting increase in gross margin, combined with a 12% decrease in selling, general and administrative or SG&A and research and development or R&D expenses.
SG&A expenses declined by 14% to $66.6 million from $77.3 million in 2008 and represented 23% of revenues in the third quarter of 2009, down from 29% of revenues in the same quarter last year. In the third quarter of 2009, R&D costs fell by 10% to $80.0 million from $88.6 million in the previous year and included $32.0 million in relation to AIP. Total operating expenses fell to $42.1 million from the previous year's operating expenses of $173.7 million.
Nine-Month Highlights
For the nine-month period, the company reported a net loss of $118.5 million or $0.25 per share, compared to a loss of $240.5 million or $0.51 per share in the year-ago period.
Net loss before tax narrowed to $72.5 million from $240.5 million reported in the corresponding period of the previous year.
Total revenue for the nine months ended September 30, 2009 were $813.0 million, down from the prior-year's revenue of $730.4 million.
FY09 in Focus
In addition, the Irish drugmaker stated that it remains on track to report double digit revenue growth for the full year and now expects Adjusted earnings before interest, taxes, depreciation and amortization or EBITDA of around $75 million, better than previously expected.
Stock Quotes
Elan shares, which have been trading between $4.85 and $10.11 in the past 52 weeks, closed Tuesday's trading session at $6.46, down 33 cents or 4.86%.
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