) reported earnings of 15 cents per share for the fourth quarter
of 2012 compared to the year-ago loss of 32 cents per share.
Earnings benefited from higher revenues.
Fourth quarter 2012 revenues increased 18% year over year to
$319.8 million. Revenues during the quarter were ahead of the
Zacks Consensus Estimate of $318 million. The increase was
primarily attributable to strong sales of Tysabri.
Full year loss of 63 cents was wider than the Zacks Consensus
Estimate of a loss of 50 cents per share but narrower than the
year-ago loss of 77 cents per share. Full-year revenues were $1.2
billion reflecting an increase of 13%. Elan's full year revenues
were however in line with the Zacks Consensus Estimate.
Quarter in Detail
Sales of Tysabri recorded by Elan rose 18.1% to $319.6
million. At year-end 2012, about 72,700 patients were on
commercial and clinical Tysabri therapy worldwide. This
represents a 12% increase from the year-ago number.
Global in-market net sales of Tysabri climbed 14% to $432.8
million in the reported quarter. In the US, Elan recorded Tysabri
net sales of $243.0 million, up 24%. The rise was primarily
attributable to an approximately 17% increase in units sold as
well as price hikes.
Tysabri rest of the world (ROW) revenues went up 4% to $189.8
million. Out of the total ROW revenues, Elan recorded revenues of
$76.6 million, up 3.2%. The upside in ROW sales reflect an
increase in units sold, which was eventually offset partially by
unfavorable pricing and foreign currency movements.
During the reported quarter, selling, general and
administrative (SG&A) expenses increased 3.1% to $58.9
million. The increase was due to higher expenses in the US
related to Tysabri. Research and development (R&D) expenses
came in at $37.5 million, down 9.6% from the year-ago
The company expects global in-market net sales of Tysabri to
increase by around 15% over 2012 in-market net sales. Elan
expects aggregate SG&A and R&D expenses (excluding
Tysabri) in the range of $170 million to $190 million.
The company also expects to contribute around $60-$80 million
to Janssen AI, a subsidiary of
Johnson & Johnson
) during 2013. Out of the expected contribution to Janssen, $30
million was paid in January this year.
Biogen Buys Tysabri Rights
Elan also announced that it agreed to restructure the Tysabri
Biogen Idec Inc.
). Biogen will gain full strategic, commercial and operational
control over Tysabri.
Elan will be receiving an upfront payment of $3.25 billion
from Biogen. For the first year, Biogen will make royalty payment
of 12% on the worldwide net sales of Tysabri (for all
indication). After the first year, Elan will receive a royalty of
18% on up to $2 billion of global net sales and 25% on over $2
billion of global net sales of Tysabri.
The current collaboration agreement (profit and loss equally
shared) between the companies will be terminated. The transaction
is expected to end in the first half of this year.
Elan's fourth quarter and full year results were overshadowed
by the company's announcement regarding the restructuring of its
agreement with Biogen. Although the restructuring provides Elan
with funds and royalties, Elan will be losing an important
product like Tysabri. Elan's shares were down 10.1% following the
We expect Elan to actively pursue in-licensing deals or
acquisitions to boost its product portfolio and pipeline.
Elan carries a Zacks Rank #2 (Buy). However, other pharma
stocks such as
) carry a Zacks Rank #1 (Strong Buy).
BIOGEN IDEC INC (BIIB): Free Stock Analysis
ELAN CP PLC ADR (ELN): Free Stock Analysis
JOHNSON & JOHNS (JNJ): Free Stock Analysis
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