Macro Tsimmis

intelligently hedged investment

Élan (ELN) update #13

Posted by intelledgement on Fri, 25 Jul 08

Élan (ELN), our biotech company of tysabri fame, announced 2Q08 financial results today which showed continued top line and bottom line improvement. Y-O-Y sales increased from $183MM to $242MM—and up sequentially from $207MM last quarter—including $133MM of tysabri sales, up from $47MM a year ago. Total tysabri sales—including Biogen Idec’s (BIIB) share of non-USA sales—were $200MM, up from $72MM in 2Q07. ELN EBITA improved from a 2Q07 loss of $111MM to a loss of $36MM this quarter.

The number of patients using tysabri continues to increase. During the second quarter 2008, 50% more patients (5700) started taking the drug than in 2Q07 (14% more than were added in 1Q08). Approximately 31,800 patients were on therapy worldwide as of 30 Jun 08, an increase of 22% over the 26,100 patients who were on therapy at the end of March 2008, and of 127% over the 14,000 patients who were on therapy this time last year. Management anticipate making the $75MM payment to BIIB this quarter that is required for ELN to maintain a 50% share of non-USA sales of the drug in excess of $700MM, and they project total usage to reach 100,000 patients by the end of 2010. (We think that number is likely to be closer to 120,000, barring any significant additional flareups of progressive multifocal leukoencephalopathy.)

While all is cool on the tysabri front, we are looking forward anxiously to the imminent International Conference on Alzheimer’s Disease in Chicago which begins on 26 July. ELN plan to present the full Phase 2 data on their Alzheimer’s disease prospective drug bapineuzumab (AAB-001) next Tuesday. The preliminary results discussed here last month have left some analysts cold, as detailed in this entry in Mike Huckman’s blog. Normally we don’t pay much mind to analysts, but Jonathan Aschoff is notorious as one of the leaders of the Dendreon (DNDN) shortsellers prior to the FDA decision sidelining provenge back in May 2007, so when he pooh-poohs a drug, we listen.

We estimate that based on PML-free tysabri sales, ELN stock “should” be worth around $16-18/share by the end of 2008…and it closed today at $32.34. This implies pretty high expectations for AAB-001; hence our nervousness with respect to the results to be announced Tuesday. Stay tuned.

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