"Elan to decide on $300m new plant as revenue rises

By John Mulligan

Friday October 24 2008

Irish pharmaceutical firm Elan will make a decision before Christmas on the proposed location in Dublin for a $300m manufacturing plant, according to chief executive Kelly Martin.

Speaking yesterday as the company announced a 53pc year-on-year rise in revenue during the third quarter to $270.1m, Mr Martin confirmed that the planned sale of the company's drug delivery unit has been postponed "for the foreseeable future".

Elan's shares tumbled more than 9pc in Dublin yesterday to close at €5.64.

It had been expected that the drug technology unit could attract a purchase price of up to $1.4bn.

Chief financial officer Shane Cooke said there had been "considerable interest" in the unit, but that a decision had been made to pull the sale. He said structures would be put in place to fuel growth at the drug delivery division.

Private Equity

Private equity giants including Texas Pacific, Bain Capital and Warburg Pincus had all expressed an interest in the business. Kohlberg Kravis Roberts and Cinven had already pulled out of the bidding process.

Mr Martin added that the planned sale "wasn't a balance sheet reason; it was a strategic reason" when asked how the postponement might affect its ability to repay $1.1bn of debt that matures in November 2011.

He added that it would be premature to say what options the company would explore in relation to the debt.

Elan said that its adjusted earnings before interest, tax, depreciation and amortisation were now close to break-even, and that the break-even position should be achieved by year-end.

It posted a net loss of $84m for the period, down from $87m a year ago, beating estimates.

Patient enrolment for use of Elan's Tysabri multiple sclerosis treatment declined after two new cases of the life-threatening brain disease PML were discovered during the summer. One of those patients has almost recovered, while the other was "not in good shape", according to Mr Martin.

CFO Shane Cooke added that extrapolating patient enrolments since the summer, Elan would have 60,000 people using the drug by the end of 2010. That's below the 100,000 target the company hopes to reach. For every 10,000 patients that sign up to use Tysabri, Elan generates an extra $100m in annual profits.

Moderation

"There was a moderation in subscribing habits," conceded Mr Cooke, who added that it was too early to determine whether the slower take-up since the summer would continue. He added that the 100,000 target remained appropriate.

Analyst Ian Hunter with Goodbody Stockbrokers also said that the fact Tysabri subscriptions had not fallen as much as expected was a "positive riposte" to those who believed the enrolment numbers would shrink more significantly.

- John Mulligan"

http://www.independent.ie/business/i...s-1508045.html

Cherie