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Elan increasing operating leverage to allow for eventual benefit from Tysabri
By Jennifer Lanning Drey
Portland, Ore., Nov. 7 - Elan Corp. plc is working to increase its operating leverage through focused cost discipline in order to financially benefit from an eventual uptake in Tysabri, chief financial officer Shane Cooke said at the Cowen and Co. 7th Annual Global Health Care Conference in London on Tuesday.
The company's ultimate goal is to return to profitability, Cooke said.
"From Elan's perspective, we have over the last number of years focused very much on creating as much financial leverage as we can so that the benefit financially from Tysabri can be reflected in our results, and it is an important part of our return to profitability," he said.
One of the major factors in Elan's return to profitability is its need for Tysabri to break even on an EBITDA basis, Cooke said.
To achieve that goal, the drug, which was relaunched earlier this year, needs to have about 15,000 users. Currently, it is about one-third of the way there, he said.
Elan must also remain EBITDA positive in all areas outside of Tysabri in order to return to profitability, and Cooke said the company has been EBITDA positive for the last 12 months.
Elan reported cash and cash equivalents of just under $1 billion at Sept. 30.
The company has roughly $2 billion of outstanding debt, $850 million of which is due in 2008. Of that amount, $250 million is convertible, and the company plans to force those holders to convert or redeem their notes earlier than the 2008 maturity.
"We're pretty comfortable with where we are from a debt and liquidity perspective," Cooke said.
In its pipeline, Elan is advancing drugs for neurodegenerative diseases, including Alzheimer's disease and Parkinson's disease, and autoimmune diseases, including Tysabri for Crohn's disease.
Elan is a neuroscience-based biotechnology company based in Dublin, Ireland.
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