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Elan Corporation, plc (ADR) (ELN)

Q4 2009 Earnings Call

February 10, 2010 8:30 am ET


David Marshall - VP, Investor Relations

G. Kelly Martin - Chief Executive Officer, Executive Director

Shane Cooke - Chief Financial Officer, Executive Director and Head of Elan Drug Technologies

Carlos V. Paya M.D., Ph.D. - President


Rick Silver - Barclays Capital

Annie Cheng - Bryan, Garnier & Co LTD

Ian Anderson - Cowen & Company

Julian Vanderance (ph) – UBS



Ladies and gentlemen, welcome to the Elan Corporation Q4 and full year financial 2009 results conference call. During the presentation all participants will be in a listen-only mode. Afterwards we will conduct a question-and-answer session. (Operator's Instructions) As a reminder, this call is being recorded Wednesday, February 10th. I would now like to turn the conference call over to David Marshall, Vice President of Investor Relations. Please go ahead.

David Marshall

Thank you, Tanya. Good morning and good afternoon, everyone. Welcome to Elan's fourth quarter and full year 2009 financial results call. I hope you've had a chance to review our press release. If not, we would encourage you to go to our website at where you will find out. Joining me on today's call will be CEO Kelly Martin, President Carlos Paya, and Executive Vice President and CFO Shane Cooke.

Today we will take you through our financial results and provide an R&D and business update. Before we begin with Kelly's remarks, I would like to review Elan's safe harbor statement. Let me remind you that today's call will contain forward looking statements about Elan's financial condition, results of operations, business prospects, and products in research. These forward looking statements involve substantial risks and uncertainties that could cause actual results to differ materially from those described or projected. A list of these risks and uncertainties is included in our fourth quarter and full year 2009 financial results press release which was issued this morning and in our 2008 annual report on Form 20 and our Forms 6-K 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 certain financial measures such as EBITDA, earnings before interest, taxes, and deprecation, and adjusted EBITDA, EBITDA plus or minus share based compensation, net gains or losses on divestment of businesses, other net gains or charges, net investment gains or losses, and net charge on debt retirement. These financial measures are non-GAAP financial measures under Securities and Exchange Commission rules. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures are included in today's press release.

Now I would like to turn the call over to Kelly Martin.

G. Kelly Martin

Thanks, David. Thank you all for joining us. Before I turn the call over to Shane Cooke and Carlos Paya, I just wanted to make a number of introductory comments. First and foremost, and Shane will review this in much more detail, 2009 was a very solid year for the company from a financial performance point of view, revenue up slightly over 11%, operating expenditures down 9%, and at the operating income line, a loss of $10 million versus the year before which was a loss of $109 million. So an improvement of over 90%.

We remain very focused on financial improvement and financial focus as we move forward into 2010. Also in 2009 we underwent a very thorough and exhaustive review strategically of the company on how best to position ourselves moving forward. After six or seven months worth of work we were very pleased to announced a strategic transaction with Johnson & Johnson who is now our largest shareholder. We believe this transaction fundamentally repositions the company, most importantly in terms of risk reward. We believe the J&J transaction has allowed us to share, spread out, or reduce risk across our science platform, clinical activity, regulatory decisions, and financial commitment to what could be very exciting technology.

We did all of that from a risk management point of view while maintaining a participation in the upside of the immunotherapeutic platform, to Alzheimer's, and I would remind people that's not just bapineuzumab, but it's bapineuzumab the vaccine which is ACC001 to subcutaneous formulation, and the associated backups to all of those lead programs of which there are multitudes.

As we look forward to 2010, broadly speaking we will first and foremost continue to work very positively and constructively with our main partners Jim Mullen at Biogen Idec, Tony Cruz at Transition Therapeutics, and Dr. Ron Cohen at Acorda. We look forward to another good year constructively of moving the various programs and assets forward.

We will also continue to work on, as we have in the last few years, advancement of the P&L moving forward, and as Shane will go into, we hope to make continued progress of the operating income line that is quite significant. We also will look forward to moving our pipeline forward based on both data and our assessment of risk reward as it relates to how we assess things both with our internal resources, with our partners, and with our external advisory board from a scientific and clinical point of view.

Lastly, in general themes, which have been consistent over the last several years, we will continue to manage risk dynamically, in particularly within EDT and the bio neurology business. We continually assess risk and we assess reward and make business decisions around how to move our assets, pipeline, science, and technology forward. We will continue to look to increase productivity, revenue per head, and other measures that we use internally. We will continue to look at IP as both a strategic asset for offensive and defensive reasons across the entire company, and last but not least, we will continue to be very focused on retaining, developing, and acquiring the type of talent that we need to move the company forward.

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