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Elan (ELN)

Q1 2013 Earnings Call

April 24, 2013 8:30 am ET

Executives

David Marshall - Vice President of Investor Relations

G. Kelly Martin - Chief Executive Officer and Executive Director

Nigel Clerkin - Chief Financial Officer and Executive Vice President

John Given - General Counsel and Advisor to the Chairman

Analysts

Michael J. Yee - RBC Capital Markets, LLC, Research Division

Marshall Urist - Morgan Stanley, Research Division

Adrian Howd - Berenberg Bank, Research Division

Corey B. Davis - Jefferies & Company, Inc., Research Division

William Tanner - Lazard Capital Markets LLC, Research Division

Eric Schmidt - Cowen and Company, LLC, Research Division

Vincent Meunier - Exane BNP Paribas, Research Division

Guillaume van Renterghem - UBS Investment Bank, Research Division

Richard J. Parkes - Deutsche Bank AG, Research Division

Presentation

Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Elan Corporation First Quarter 2013 Financial Results Call. [Operator Instructions] As a reminder, this conference is being recorded, Wednesday, April 24, 2013. I would now like to turn the conference over to David Marshall, Vice President of Investor Relations. Please go ahead, sir.

David Marshall

Thanks, Demetra. Good morning and good afternoon, everybody. Welcome to Elan's First Quarter 2013 Financial Results Call. If you have not reviewed our press release, please go to our website at www.elan.com where you will find it.

On today's call would be Chief Executive Officer, Kelly Martin; Chief Financial Officer, Nigel Clerkin; and our General Counsel, John Given. Before we begin, I will review Elan's Safe Harbor statement. Today's call will contain forward-looking statements about Elan's financial condition, results of operations, business and prospects.

These forward-looking statements involve substantial risks and uncertainties that could cause actual results to differ materially from those described or projected. Lists of these risks and uncertainties are included in our first quarter 2013 financial results press release and in our 2012 annual report on Form 20-F and our Form-6K filed with or furnished to the Securities and Exchange Commission. Elan assumes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. In addition, today's conference call and webcast will include non-GAAP financial measures such as adjusted EBITDA. Reconciliations of these non-GAAP financial measures to the most directly-comparable GAAP measures are included in today's call.

I'll now turn the call over to Kelly Martin.

G. Kelly Martin

Thanks, David. Good morning, afternoon, everybody. On behalf of Bob Ingram, our Chairman of the Board, and myself, we appreciate your taking some time to get updated from us regarding Elan.

A few comments and then I'll turn the call to our Chief Financial Officer, Nigel Clerkin.

First comment upfront is, obviously, people will know that we're under what's called an Offer Period from an Irish Takeover point of view. Given that, we have our General Counsel, John Given, on the phone to answer any specific questions or to step in if there are topics that are frankly just out of bounds. Some of the Irish Takeover Rules frankly are a bit opaque, but we will do our best to stay within the bounds of what's advised. Also, there's some U.S. security laws that, to me, as a lay man are a little bit illogical, but again, we will do our best to stay within the bounds of what's advised.

We also have on this call our advisors, particularly Citibank, Andra Davis [ph], as they need to make sure that our communications are consistent with the various rules and regulations in both jurisdictions. A few things I just want to touch on again, before I turn the call to Nigel. In my comments and in my quote for this quarter, I tried to lay out some principles that have guided us for basically a decade.

Broadly speaking, this is a risky industry and everything we've tried to do in the past has been to reduce or quantify that risk as much as possible on behalf of shareholders and allow shareholders to maintain any upside that may be forthcoming with either the asset or the product or the science. And if you look at over the last decade or so, roughly speaking, we've done 10 or more capital market transactions. We've done at least 15 corporate transactions in different sizes and shapes, different assets, different geographies. So if you take that over a decade or so, we're averaging 2 to 3 transactions a year across either our capital structure or our business.

Very specifically, in the last 4 years, we've done 4 transactions that were $1 billion in size or greater. J&J transaction with the AIP technology from a science point of view. The EDT transaction with Alkermes and the combining of those assets, which has worked out well for both companies. The Tysabri and Biogen Idec transaction that was worked on second half of last year and announced the early part of this year, and last but not least, our recently completed $1 billion share repurchase, which Nigel will shed some further light on. Again, characteristically, our view is that each of those $1 billion or more transactions has been to the mutual benefit of the counterparty. In the case of AIP, J&J and Elan, EDT was Elan plus Alkermes and the Tysabri transaction benefit both Biogen and Elan. And again, characteristically, each of those reduced risks, risks for us and our shareholders, and maintain some optionality on the upside.

Our strategic process post the close of Tysabri, which was only a couple of weeks ago, is going to be consistent in theme and consistent in focus. I and members of the executive team, in the last several months, have talked to dozens of CEOs around the world. As we have done in the past, we will do in the future, when we engage with different companies and different CEOs, we try to figure out what's a win-win for them and a win-win for us. I would characterize these discussions as fantastic across multiple dimensions. It's not easy in today's world being a CEO of a public company, or for that matter, a CEO of a private company, given the fact of the regulatory complexity, the science complexity and the long cycle time in our business. All of these discussions, I am pleased, to date have been highly confidential and there has been no leakage whatsoever in our discussions anywhere across the globe.

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