Elan Corporation, plc (ELN)
Q3 2007 Earnings Call
October 25, 2007 8:30 am ET
Chris Burns - IR
Kelly Martin - President and CEO
Shane Cooke - EVP and CFO
Lars Ekman - EVP of R&D
Jack Gorman - Davy
Ian Hunter - Goodbody Stockbrokers
Orla Hartford - NCB Stockbrokers
Corey Davis - Natixis Bleichroeder
Bill Tanner - Leerink Swann
Rich Silver - Lehman Brothers
Walter Branson - Regiment Capital
Ian Anderson - Cowen & Company
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I will now like to turn the conference over to Chris Burns. Please go ahead, sir.
Hello, everyone. Welcome to Elan’s third quarter 2007 financial results call. I hope you’ve had a chance to review our press release. If not, we encourage you to go to our website at www.elan.com, where you'll find it.
Joining me on today's call will be President and CEO, Kelly Martin; Executive Vice President and CFO, Shane Cooke; and Executive Vice President of Research and Development, Dr. Lars Ekman who is joining us from Europe. Today, we’ll take you through our financial results and provide an R&D and business update.
Before we begin with Kelly’s remarks, I’ll review our 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 and 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 third quarter financial results' press release which was issued this morning and in our 2006 annual report on Form 20-F and our Form 6-K filed with or furnished to with 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 webcast will include certain financial measures such as EBITDA; Earnings Before Interest, Taxes, Depreciation, and Amortization; and adjusted EBITDA, EBITDA plus or minus share-based compensation, net gains or losses on divestment businesses, other net gains and charges, net investment gains or losses and net charges 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 and most directly comparable GAAP measures are included in today’s press release.
Now, I’ll turn the call over to Kelly Martin.
Thank you, Chris, and we appreciate everybody joining us today. On behalf of Kyran McLaughlin and myself, the rest of management team and the rest of the Board, we would like to share with you the results and some comments from our last quarter. I’ll make a few comments before I turn things over to Shane Cooke, who is also joining me on this call, our CFO. And Dr. Lars Ekman, the President of R&D is also on the call and he will make some comments after Shane.
Now before turning it over to Shane, I’ll just like to go through a number of things. With regards to this past quarter, I believe we have demonstrated the continued execution and have delivered some tangible results in three key areas. Broadly, financially, our revenue was up over 40%. Our operating expenses were down 3%. The net loss was reduced by 25% and as you’ll hear from Shane, the adjusted EBITDA was reduced by over 65%.
In Tysabri, we continue to have enormous confidence in Tysabri in MS as well as further indications GI, oncology and perhaps others down the road. We continue to work very diligently with our partner Biogen on maximizing the value of this asset as we move forward in its evolution. And lastly, with regards to Tysabri, based on its efficacy, we believe there is very significant continued upside in the MS indication within the US, Europe and rest of the world markets.
The third area of progress over the third quarter is our continued focus and advancement in the Alzheimer’s space with regard to clinical activity. We continue to make progress across the Board. With our partner Transition Therapeutics and the compound ELND-005, we have announced that we will be starting our initial Phase II trial sometime over the next few months.
In immunotherapy with our partner Wyeth, we continue to broaden the number of programs in immunotherapy, deepen our knowledge and accelerate their advancements both individually and collectively. Importantly, AAB-001, is the lead program in that portfolio of immunotherapeutic activity, Dr. Ekman will provide a very specific update on this clinical program during his remarks.
With that, I am going to turn it to our Chief Financial Officer, Shane Cooke and he will walk you through the quarter’s results in our financial arena. Shane?
Thanks Kelly and good morning and good afternoon to everybody. My prepared remarks will focus on the overall results for the quarter, together with an update on the performance of Tysabri and our expectations for the remainder of 2007.
Before going into a more detailed presentation, I would like to firstly highlight four key aspects of this quarter's financial results. One, we continue to see an improvement in operating margins with revenues increasing at a much faster space than operating costs, which results in a 25% reduction in net losses and a 66% reduction in adjusted EBITDA losses.