Elan Reports First Quarter 2007 Financial Results

Business Wire, April 24, 2007

DUBLIN, Ireland -- Elan Corporation, plc today announced its first quarter 2007 financial results and provided a business update. Commenting on Elan's business, Kelly Martin, Elan's president and chief executive officer, said, "2007 started strongly in terms of revenue growth, operating improvements and continued advancements in the pipeline. Of particular note this quarter is the receiving of Fast Track designation from the FDA for ELND-005 in the area of Alzheimer's, continued progress in the drug technology portfolio and associated royalty streams, as well as the progress made in the Tysabri patient uptake for MS in both Europe and the US. Our focus and commitment continue to center on delivering results for shareholders that allow us to accelerate towards profitability and drive value for the near, intermediate and long term."

Commenting on Elan's first quarter financial results, Shane Cooke, Elan's executive vice president and chief financial officer, said, "We are very pleased with the strong start to the year reflected in revenue growth of 31% and a reduction of two-thirds in Adjusted EBITDA losses resulting from the continued improvement in operating margins. The net loss increased, mainly due to a charge in respect of the early retirement of debt this quarter and the inclusion of a gain on the sale of EU rights to Prialt in 2006."

Mr. Cooke added, "Revenue growth reflects the solid performance of Tysabri driven by the approximately 12,500 patients who have signed up for therapy, a 30% increase over that reported only two months ago. As previously guided, we remain optimistic that Elan will record Adjusted EBITDA losses of less than $50 million for 2007 based on the strong performance reflected in the first quarter's results."

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To supplement its consolidated financial statements presented on a US GAAP basis, Elan provides readers with EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) and Adjusted EBITDA, non-GAAP measures of operating results. EBITDA is defined as net loss plus or minus depreciation and amortization of costs and revenues, provisions for income tax and net interest expense. Adjusted EBITDA is defined as EBITDA plus or minus share-based compensation, net gains or losses on divestment of products and businesses, other net gains or charges, net investment gains or losses and net charge on debt retirement. EBITDA and Adjusted EBITDA are not presented as, and should not be considered alternative measures of, operating results or cash flow from operations, as determined in accordance with US GAAP. Elan's management uses EBITDA and Adjusted EBITDA to evaluate the operating performance of Elan and its business and these measures are among the factors considered as a basis for Elan's planning and forecasting for future periods. Elan believes EBITDA and Adjusted EBITDA are measures of performance used by some investors, equity analysts and others to make informed investment decisions. EBITDA and Adjusted EBITDA are used as analytical indicators of income generated to service debt and to fund capital expenditures. EBITDA and Adjusted EBITDA do not give effect to cash used for interest payments related to debt service requirements and do not reflect funds available for investment in the business of Elan or for other discretionary purposes. EBITDA and Adjusted EBITDA, as defined by Elan and presented in this press release, may not be comparable to similarly titled measures reported by other companies. Reconciliations of EBITDA and Adjusted EBITDA to net loss from continuing operations are set out in the tables above titled, "Non-GAAP Financial Information Reconciliation Schedule."

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Net Loss

The net loss for the first quarter of 2007 increased to $93.0 million from $33.3 million in the same period in 2006. The increase in net loss is due principally to the inclusion of a gain of $44.2 million related to the sale of the Prialt([R]) European rights in the first quarter of 2006, and the inclusion of an $18.8 million net charge on the early retirement of debt in the first quarter of 2007.

Adjusted EBITDA (see page 3)

Negative Adjusted EBITDA for the first quarter of 2007 was $6.4 million, compared to $17.2 million in the same period of 2006, a reduction of almost two-thirds. This improvement reflects an increase of 31% in revenues, principally related to Tysabri, and improved operating margins. A further analysis of Adjusted EBITDA between Tysabri and the rest of the business is included in Appendix I.

Revenue

Total revenue for the first quarter of 2007 increased 31% to $176.0 million from $134.3 million in the same period of 2006. Revenue is analyzed below between product revenue and contract revenue.

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Revenue from marketed products

Tysabri

The distribution of Tysabri in both the United States (US) and European Union (EU) commenced in July 2006. Tysabri was developed and is now being marketed in collaboration with Biogen Idec Inc. (Biogen Idec). In general, subject to certain limitations imposed by the parties, we share with Biogen Idec most of the development and commercialization costs for Tysabri. Biogen Idec is responsible for manufacturing the product. In the United States, Elan purchases Tysabri from Biogen Idec and is responsible for distribution. Consequently, Elan records as revenue the net sales of Tysabri in the US market. Elan purchases product from Biogen Idec as required at a price that includes the cost of manufacturing, plus Biogen Idec's gross profit on Tysabri and this cost, together with royalties payable to other third parties, is included in cost of sales.