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Loss Narrows for Elan

The company remains hopeful about Tysabri.

The return of Tysabri will be the key factor in



performance this year, the company said Tuesday, but it didn't offer a specific sales prediction for the multiple sclerosis drug.

Last summer, Tysabri was reintroduced in the U.S. and launched in several European Union countries, 18 months after Elan and its partner

Biogen Idec

(BIIB) - Get Biogen Inc. Report

suspended it from the U.S. market following a suspected link to a potentially deadly brain disorder.

Shane Cook, Elan's chief financial officer, said the Ireland-based company is "confident

Tysabri will be a blockbuster drug in MS."

Those comments came as Elan posted a fourth-quarter loss of $26.5 million, or 6 cents a share, on revenue of $166.4 million. For the same period in 2005, Elan lost $58.3 million, or 14 cents a share, and had revenue of $140.4 million. Tysabri produced a combined $30 million in fourth-quarter sales and $38.1 million for 2006.

"Our financial performance

in 2006 improved and our pipeline portfolio continued to progress," said Kelly Martin, Elan's president and CEO.

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Tysabri aside, Elan predicted total sales will exceed $500 million in 2007 for product revenue, manufacturing revenue, royalties and contract revenue. Last year's top line was $560.4 million, including Elan's share of Tysabri's sales.

Even though Elan declined to give a sales forecast for the drug for this year, "on the basis of the initial take-up," the company believes growth in Tysabri revenue will drive its return to profitability.

Among other products, fourth-quarter sales of the intravenous antibiotic Maxipime fell to $46.2 from $46.8 million for the same period in 2005. The basic U.S. patent expires next month, and two other U.S. patents expire in 12 months.

Sales of the injectable antibiotic Azactam rose 22% to $21.3 million even though its patent expired in October 2005. No generic version has entered the market yet. The chronic-pain treatment Prialt produced sales of $3.4 million, up from $2 million. Manufacturing revenue and royalties rose 15% to $67.3 million.

By early afternoon, Elan's shares were off 31 cents, or 2.1%, to $14.50. The Tysabri news had been factored into Elan's stock last week when Biogen Idec announced its fourth-quarter results. Biogen Idec's Feb. 15 report on Tysabri sent Elan's stock up 9.1% for the day.

Two months ago, Elan and Biogen Idec asked the Food and Drug Administration to approve Tysabri for treating Crohn's disease, an inflammation of the gastrointestinal tract.

In addition to Tysabri, the other key issue for Elan this year is when, or if, it advances an experimental Alzheimer's disease drug into the third and final stage of clinical testing. Elan is collaborating with



on the drug called AAB-001.

Last October, Elan said it would conduct an interim analysis of clinical-trial data by year-end to determine when it would enter the third phase of clinical trials. On Tuesday, it said starting Phase 3 testing is one of its "key objectives" for this year, "dependent upon interim analyses of the Phase 2 data."

The company is working with Wyeth an another Alzheimer's drug, dubbed ACC-001, which is in Phase 1 clinical trials. Elan hopes to move this compound into a second round of clinical testing this year. It also hopes to start Phase 2 clinical trials on AZD-103, another Alzheimer's drug, via a collaboration signed in September with Toronto's

Transition Therapeutics