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Elan Reports Third Quarter 2012 Financial Results

Research and development update

In August 2012, Elan commenced a Phase 2, placebo-controlled, safety and efficacy study of oral ELND005 as an adjunctive maintenance treatment in patients with Bipolar I Disorder to delay the time to occurrence of mood episodes.

During the third quarter of 2012, Johnson & Johnson and Pfizer Inc. (Pfizer) announced the discontinuation of Phase 3 development of bapineuzumab intravenous in mild to moderate Alzheimer’s based on the co-primary clinical endpoints not being met in the 301 and 302 studies. With the discontinuation of the Phase 3 programs, Elan recorded a non-cash impairment charge of $117.3 million against the carrying value of the equity method investment in Janssen AI (see page 16).

In the quarter an Investigational New Drug (IND) application was filed for NEOD001 for amyloid light chain amyloidosis.

At the 28th Congress of the European Committee for Treatment and Research in Multiple Sclerosis (ECTRIMS) held in Lyon, France, on October 10-13, 2012, there were 11 company-sponsored Tysabri presentations. Key data presented indicated patients on Tysabri experienced reduced annualized relapse rates, particularly in those treated with Tysabri early in the course of their disease. Data from a separate study showed improvement of MS-related fatigue also significantly improves quality of life in patients treated with Tysabri. Additional data presented supported the utility of JC-virus antibody testing in clinical practice.

Other net charges

Other net charges for the three and nine months ended September 30, 2012 and 2011 were as follows:
Three Months Ended     Nine Months Ended
September 30 September 30
2011   2012 2011   2012
US$m   US$m       US$m   US$m
(0.7) 35.2 Severance, restructuring and other costs 1.2 36.6
11.0 In-process research and development 11.0
Facilities costs 2.7
65.1 Asset impairment charges 65.6
(0.7) 111.3 Total 3.9 113.2
 

In the third quarter of 2012, other net charges includes severance, asset impairment and other restructuring charges of $100.3 million associated with the planned closure of the South San Francisco facility and reduction in headcount, following the announcement during the third quarter of 2012 of the separation of the Neotope business and cessation of the remaining early stage research activities. Elan expects to incur cash and non-cash charges of between $160 million and $180 million primarily consisting of employee severance costs, facilities costs and asset impairment charges in relation to this restructuring, of which $100.3 million was incurred during the third quarter of 2012.

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