Updated from 1:33 p.m. EDT
issued second-quarter financial results on Thursday, prompting several analysts to issue the oft-repeated refrain that the company offers little promise without the multiple sclerosis drug Tysabri.
"Without Tysabri as a blockbuster product, we remain concerned that, unless there is a severe restructuring, Elan will have difficult repaying the $2 billion debt obligations in 2008 and 2011," said Erica Whittaker, of Merrill Lynch, in a Thursday research report, using the same words she offered in a first-quarter report. She also repeated a sell recommendation.
Elan's shares were off 46 cents, or 5.8%, to $7.53 in afternoon trading.
Kelly Martin, Elan's chief executive, tried to remain upbeat, telling investors and analysts in a prepared statement that the company and its partner
continue to meet with regulatory agencies to assess the circumstances for Tysabri's return to the market.
"We are advancing on multiple fronts, committed to pursuing a disciplined approach to managing costs and realizing revenue in our business," Martin added.
Biogen Idec and Elan
pulled the MS drug in late February after reports that two patients who took Tysabri and Avonex, an MS drug from Biogen Idec, contracted a rare, often fatal brain diseases.
Second-quarter numbers without Tysabri look like this: Elan lost $142.6 million, or 35 cents a share, on revenue of $118.6 million on a GAAP basis for the three months ended June 30. For the same period last year, Elan lost $117.6 million, or 30 cents a share, on revenue of $108.4 million.
The wider losses were primarily a result of costs associated with Tysabri and a charge for early debt retirement, said Shane Cooke, the chief financial officer, in a prepared statement. "We continue to prudently invest in Tysabri and remain capable and committed to reintroducing it as a therapeutic option for patients, should it be appropriate," Cooke said.
Biogen Idec, which is much bigger than Elan and can better absorb the Tysabri setback,
issued second-quarter financial results earlier this week, beating Wall Street's estimates.
Elan and Biogen Idec hope to complete their review of patients' records and clinical trial results by the end of the summer.
Merrill Lynch's Whittaker predicts Tysabri could return to the market in early 2006 "only in a limited clinical setting," in which it's given to patients who have no other treatment options. Peak yearly sales could be $500 million at best, says Whittaker, who doesn't own shares. Her firm is a market maker in Elan's stock, and it also has a noninvestment-banking relationship.
Strong backing is in short supply from the analysts who cover Elan's stock. According to Thomson First Call data, Wall Street has six sell ratings, three holds and only two analysts calling the shares a buy.
Another of the sell recommendations comes from Andrew Swanson of Citigroup Smith Barney, who writes in a Thursday research report that sales of the company's new pain drug, Prialt, are "off to a slow start" and that the company lowered its full-year revenue guidance from "exceeding $500 million" to a range of $460 million to $500 million.
"We believe Elan's current share price implies that Tysabri returns as the market leader in multiple sclerosis -- an optimistic scenario in our view," says Swanson, who doesn't own shares and whose firm is a market maker in the stock. He believes it's unlikely that Tysabri will return to the market.