Elan now needs to begin emphasizing results. The company continues to see Tysabri revenues climb, but has seen EDT revenues drop (Tricor is now declining) and will lose $30m in quarterly Azactam revenue starting April 1st.
Expenses appear too high for a company that does not manufacture, market, sell or distribute. And R&D programs have been stuck in place for almost 6 years now, except for partnered programs (AAB and ELND-005.) Notably, the PD antibody that Lars Ekman said would enter P1 during 2004 has yet to do so, and the anti-VLA4 small molecules seem to have ceased development altogether.
The company had almost 1,700 employees prior to the JNJ agreement, with Kelly Martin insisting that the company could not move forward with fewer people or leaner structures. With 70% of its revenues coming from Biogen's sales of Tysabri, 10% of its sales coming from sales of Maxipime and Azactam which are supplied by GSK and distributed and sold by 3rd parties, and 20% of its sales coming from EDT royalties received from 3rd parties, AND with no R&D progress on programs managed by Elan, it is hard to understand how Elan needs so many employees and can spend so much money.
I think Elan can lean up and still push its dormant programs along. JNJ and Biogen are running the Alzheimers and Tysabri clinical programs respectively. Lilly is driving its gamma secretase program. ELND-005 is oral and the p2 is on autopilot at present. EDT should be a straightforward proposition to run.
Last year, the company promoted the idea that it put in place cost savings that would save $12.5m per quarter by Q4 of last year. But these did not manifest (the $30m per quarter that JNJ assumes in R&D spending did show up.) My question is: when will the BoD and shareholders insist on operating performance?
Elan appears to have the engine and the wheels to get it somewhere good and fast. But, it does seem to be missing a driver. |
