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Elan Corporation (ELN)

Q3 2012 Earnings Call

October 24, 2012 08:30 AM ET

Executives

David Marshall - VP, IR

Kelly Martin - CEO

Nigel Clerkin - EVP & CFO

Analysts

Jack Gorman - Davy Stockbrokers

Corey Davis - Jefferies & Co.

Michael Yee - RBC Capital Markets

Marshall Urist - Morgan Stanley

Eric Schmidt - Cowen and Co.

Vincent Meunier - Exane BNP

Presentation

Operator

Welcome to the Elan Corporation Q3, 2012 financial results conference call. (Operator Instructions). I would now like to turn the conference over to David Marshall, Vice President, Investor Relations, Elan Pharmaceutical Corp. Please go ahead sir.

David Marshall

Thank you Jina. Good morning and good afternoon everyone. Welcome to Elan’s third quarter, 2012 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 will be CEO, Kelly Martin; and CFO, Nigel Clerkin.

Before we begin I would like to review Elan's Safe Harbor Statement. Today's call will contain forward-looking statements about Elan's financial condition, results of operations, business and research prospects. 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 are included in our third quarter 2012 financial results press release, and in our 2011 Annual Report on Form 20-F 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 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 press release.

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

Kelly Martin

Thanks David. Good morning, afternoon to everybody. Thank you for joining us today and on behalf of our Chairman, Bob Ingram and myself we will present our third quarter results and I will also add some other comments. The third quarter was a busy one for Elan. A number of things occurred which both directly and indirectly impacted us and our business and our decisions. First and foremost in July Johnson and Johnson and Pfizer announced the results of the bapineuzumab/AIP 302 and 301 trials that’s was both carriers and non-carriers. Subsequently they have presented data and the investigators have presented data at two medical meetings, the third and important medical meeting is next week at the CTAD meeting in France.

Second thing that occurred in the third quarter was we announced a spin-off of our long term high quality research and discovery activity into a separate entity called Neotope that will be the CEO of that entity will be Dale Schenk who is the Chief Scientific Officer of Elan PLC and has 20 plus years’ experience at a Senior Executive level from a science point of view. Joining Dale will be Ted Yednock who is our Head of Research, Jane Kenny and several other extremely high quality capable scientists.

We as Elan PLC will provide initial capital of somewhere between a $120 million and a $130 million to the entity. We announced in August that our goal would be to close that transaction by the end of the year and to-date that remains on track and that remains our target. The third thing we did and Nigel Clerkin and we will talk about it in a bit more in some detail in his comments, we have refinanced our outstanding bonds, Nigel and team did a great job in September and in that transaction and again you will hear more from Nigel but we refinanced 250 basis points from a coupon point of view, cheaper than we had done several years ago. This allows us tremendous flexibly and capital to utilize in a variety of different ways going forward. The fourth thing we did was we also announced that Hans Peter Hasler would become the Chief Operating Officer of Elan. Hans Peter had previously have been President of Biogen Idec. He was in charge of global marketing in particularly for neurology at (inaudible).

He has 30 plus years’ experience in the pharmaceutical biotech business and all globally based and so Hans Peter has moved from our Board of Directors to joining myself and my other colleagues on the executive management team.

Some other comments broadly for TYSABRI and again you will hear bit more from Nigel and we had a bunch of things in our announcements for the quarter and you will hear more also from Biogen Idec tomorrow on their results call but year-over-year patient growth was up 13%. We continue with the SPMS trial from a life cycle point of view. And we and Biogen continue to explore, talk about and plan for other potential life cycle indications, all of which look quite interesting, quite large and quite important potentially for the future of these assets. The growth and the utilization of the assay continues and the growth globally and the demand for TYSABRI particularly with patients who are declining in one way shape or form remains on track and I will also remind people that for Elan roughly every 10,000 patients there is a $100 million of operating earnings and we continue to believe that this asset will grow double digits for the foreseeable future.

D5 small molecule that we own, we announced that we started bipolar trial during the course of the summer. We are also in discussions with regulators quite actively on other potential utilizations of D5. Those utilizations would be symptomatic indications. The trial should we go forward would be rather short, they will not be enormous, large, multi-year, multi-100s and 100s of patient trails but we are working quite constructively with regulators on the usage of D5 for at least one other indication if not two and over the course of the fourth quarter of this year and the first and second quarter of 2013 we are making some business and portfolio decisions about whether to move that asset forward and other indications and if so what indication and what are the parameters of the trial.

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