Elan Announces Record Second Quarter 2000 Results
Revenue Increase of 30% to $305 Million Net Income Increase of 35% to $108 Million Per Share Net Income Increase of 25% to 36 Cents
DUBLIN, Ireland, July 19 /PRNewswire/ -- Elan Corporation, plc (NYSE: ELN - news; ``Elan'') announced that net income before other charges for the quarter ended June 30, 2000 was $107.9 million and diluted earnings per share before other charges was 36 cents compared to net income of $80.1 million and diluted earnings per share of 29 cents in the quarter ended June 30, 1999, resulting in increases of 35% and 25% in net income and diluted earnings per share respectively.
Revenue increased from $234.4 million in the second quarter of 1999 to $304.5 million in the second quarter of 2000, an increase of 30%, reflecting an increase of 45% in product revenue from $129.3 million in the second quarter of 1999 to $187.5 million in the second quarter of 2000 and also strong growth in royalties and fees. The increase in product revenue was due to an increase in the sale of directly marketed products including a first- time contribution from The Liposome Company Inc. (``Liposome'') and from Segix Italia S.p.A. (``Segix''), both of which were acquired during the second quarter. Excellent growth in revenue from Zanaflex®, Skelaxin® and the diagnostic businesses contributed to the overall increase in product revenue.
Research revenue for the quarter ended June 30, 2000 was $33.1 million compared to $44.3 million in the comparable quarter of 1999. The decrease reflects the elimination of revenue formerly received from Axogen Limited and Neuralab Limited following their acquisition by Elan in December 1999 and January 2000, respectively, partly offset by revenues from pharmaceutical industry partners. Research and development expenditure increased by 16% from $56.8 million in the second quarter of 1999 to $65.7 million in the second quarter of 2000. The increase in research and development expenditure reflects costs associated with clinical trials for, amongst others, Antegren®, a prospective treatment for inflammatory diseases including multiple sclerosis, and for AN-1792, a prospective treatment for Alzheimer's disease. The increase was partly offset by lower costs on ziconotide following the completion of clinical trials and the submission of a new drug application to the U.S. Food and Drug Administration (``FDA'').
Royalties and fees for the quarter ended June 30, 2000 were $83.9 million compared to $60.9 million in the comparable quarter of 1999, principally reflecting the execution of several new licence arrangements in the quarter.
Selling, general and administrative expenses increased from $60.4 million in the second quarter of 1999 to $84.4 million in the comparable quarter of 2000, reflecting the continued expansion of our marketing and sales infrastructure in the United States and in Europe, including the inclusion for the first time of the results of Liposome and Segix. By June 30, 2000, Elan had expanded its sales force to 785 personnel compared to 500 one year ago.
Operating income increased from $71.1 million in the second quarter of 1999 to $89.1 million in the first quarter of 2000, an increase of 25%, reflecting the increased revenue in the quarter partly offset by higher operating expenses. Net interest and other income was $22.0 million in the second quarter of 2000 compared to $11.0 million in the second quarter of 1999.
Net income before other charges increased to $107.9 million in the second quarter of 2000 compared to $80.1 million in the second quarter of 1999. Diluted earnings per share increased from 29 cents in the second quarter of 1999 to 36 cents in 2000, reflecting higher net income for the quarter offset in part by a higher number of shares outstanding for the period as a result of the shares issued on the acquisition of Liposome and an increase in common stock equivalents used in such calculations due to the higher average share price for the quarter. Other charges of $198.3 million arose in the quarter primarily from the acquisition of Liposome and primarily reflect the initial estimate of the acquired in-process research which has been charged to the statement of income in accordance with Statement of Financial Accounting Standard No. 2 ``Accounting for Research and Development Costs''. The charge arose from the use of purchase accounting to give effect to this acquisition.
Significant achievements in the period included:
-- the receipt of an approvable letter from the FDA for ziconotide, a
novel N-type neuronal calcium blocker for the treatment of severe
chronic pain via the intrathecal route;
-- the receipt of an approvable letter from the FDA for frovatriptan, a
drug for the treatment of migraine;
-- the closing of the acquisition of Liposome on May 12 following the
approval of the transaction by their shareholders;
-- the launch by Elan Pharmaceuticals of Zonegran®, a new anti-epilepsy
drug, which is indicated as adjunctive therapy in the treatment of
partial (focal) seizures in adults with epilepsy;
-- in Italy, the completion of the acquisition of the remaining 80.1% of
Segix not previously owned. Product sales in Segix in 1999 were
approximately $25 million; and
-- in Spain, the purchase of the remaining 50% of Vita Elan Farma SA which
was not previously owned by Elan was completed at the end of June. A
new company to operate this business, which will be known as Elan Farma
SA, will be based in Barcelona, Spain.
Commenting on the results, Donal J. Geaney, chairman and chief executive officer of Elan, said, ``This has been another very busy period for the company with the receipt of approvable letters from the FDA for ziconotide and frovatriptan and the launch of Zonegran. The key priority is now the completion of all outstanding matters with the FDA, bringing both ziconotide and frovatriptan to approved status and the successful launch of these products thereafter. We also anticipate the launch of our botulinum toxin type B which will be marketed in the U.S. as Myobloc®. The completion of the acquisition of Liposome in mid-May was an important strategic step in building a presence in the oncology and anti-fungal markets. The priorities in this business include completing matters to allow for the launch of Myocet (formerly known as Evacet) in Europe following the receipt of approval to market Myocet from the European Union Committee for Proprietary Medical Products.''
Mr. Geaney continued, ``I am also pleased that we have expanded our sales and marketing infrastructure into Italy and Spain. I remain confident that management is focused on the achievement of our ambitious goals for the remainder of the year 2000 and thereafter.''
Elan is a worldwide pharmaceutical and biotechnology company, headquartered in Dublin, Ireland. Elan is a world leader in drug delivery and in the discovery, development and marketing of products and services in neurology, oncology and pain management. Elan's principal research and manufacturing facilities are in Ireland, the United States and Israel. Elan's shares trade on the New York, London and Dublin Stock Exchanges.
Statements in this press release that are not historical facts are forward-looking statements that involve risks and uncertainties including, without limitation, risks associated with the inherent uncertainty of pharmaceutical research, product development and commercialisation, the impact of competitive products and patents, the completion of the successful integration of Liposome, as well as other risks and uncertainties detailed from time to time in periodic reports, including Elan's Annual Report on Form 20-F as filed with the U.S. Securities and Exchange Commission. Actual results may differ from the forward-looking statements.
Elan Corporation, plc
Consolidated Statement of Income
Three months ended Six months ended
June 30, June 30,
1999 2000 1999 2000
US$000s US$000s US$000s US$000s
Revenues
Product revenue 129,268 187,532 256,724 337,855
Research revenue 44,256 33,070 82,579 66,809
Royalties and fees 60,919 83,938 128,263 189,424
Total revenues 234,443 304,540 467,566 594,088
Costs and Expenses
Research & development 56,772 65,687 114,774 136,532
Cost of goods sold 46,184 65,350 93,022 124,484
Selling, general
& administrative 60,371 84,434 117,819 159,831
Total operating expenses 163,327 215,471 325,615 420,847
Total operating income 71,116 89,069 141,951 173,241
Interest and other
income (net) 10,967 22,056 17,131 37,383
Net income before tax
and other charges 82,083 111,125 159,082 210,624
Taxation (1,974) (3,250) (3,905) (5,500)
Net income before
other charges 80,109 107,875 155,177 205,124
Other charges -- (198,251) -- (198,251)
Net income/(loss) 80,109 (90,376) 155,177 6,873
Weighted average number of
ordinary shares outstanding
(in thousands) 266,566 279,489 265,830 274,703
Basic earnings per
ordinary share before
other charges $0.30 $0.39 $0.58 $0.75
Basic earnings per
ordinary share after
other charges $0.30 ($0.32) $0.58 $0.03
Diluted earnings per ordinary
share before
other charges $0.29 $0.36 $0.55 $0.70
Diluted earnings per
ordinary Share after
other charges $0.29 ($0.32) $0.55 $0.02
Elan Corporation, plc
Consolidated Balance Sheet
As at As at
December 31, June 30,
1999 2000
US$000s US$000s
Assets
Current Assets
Cash and marketable investment securities 974,002 1,072,001
Other current assets 325,855 378,298
1,299,857 1,450,299
Intangible assets 989,655 1,541,944
Property, plant and equipment 233,112 256,045
Investments and marketable investment securities 474,586 382,817
Total Assets 2,997,210 3,631,105
Liabilities and Shareholders' Equity
Shareholders' equity 1,326,369 2,050,379
Accounts payable and accrued liabilities 453,795 349,185
4.75% exchangeable notes 325,000 325,000
3.25% zero coupon subordinated exchangeable notes 892,046 906,541
Total Liabilities and Shareholders' Equity 2,997,210 3,631,105
SOURCE: Elan Corporation, plc
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