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Revenue Slips at Elan

The company says it will take 'several quarters' before it can assess the prospects for Tysabri.

Elan

(ELN)

says it will take "several quarters" before the company can assess the prospects for Tysabri, the multiple sclerosis drug that was removed from the U.S. market in February 2005 and reintroduced this past summer.

Additionally, Elan says it will file an application with the Food and Drug Administration for Tysabri as a treatment for Crohn's disease, a debilitating gastrointestinal ailment, by the end of the year.

"We are encouraged by the initial results in the relaunch of Tysabri for MS in the U.S. market and the launch in the European markets," said CEO Kelly Martin. Tysabri became available in the European Union in July, and it is now sold in nine EU countries. Canada approved the drug earlier this month.

Martin's comments came as Elan reported a third-quarter loss of $117 million, or 27 cents a share, on revenue of $123.3 million. The figures include one-time charges and costs for share-based compensation. For the same period last year, Elan lost $67.1 million, or 16 cents a share, on revenue of $128.6 million.

Excluding Tysabri, Elan expects full-year revenue to exceed $500 million. It didn't give an earnings prediction.

The FDA cleared Tysabri for MS in November 2004. Clinical trials had encouraged analysts to predict that Elan and its marketing partner

Biogen Idec

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would have big-selling product.

But a few months later, the companies

pulled the drug, saying two patients in MS clinical trials had contracted a rare, often fatal brain disease. The patients had also been taking the Biogen drug Avonex. Subsequently, they identified another patient with the condition, called progressive multifocal leukoencephalopathy, or PML, who participated in a Crohn's disease study.

Tysabri's comeback is filled with

many restrictions imposed by the FDA. They include a black box warning on the label, the FDA's strongest warning, about the risk of PML. The label also cautions against giving Tysabri to patients taking certain other drugs and those with compromised immune systems.

The drug must be administered at specific cites, and physicians are required to be trained in a risk-management program to identify appropriate patients. Tysabri is approved to slow the progression of MS patients' disabilities and to reduce the frequency of relapses.

Shane Cook, Elan's chief financial officer, told analysts and investors that it "will take a few quarters" before Elan and Biogen Idec can measure Tysabri's sales progress. "Most insurers indicate they will reimburse consistent with the label," he said.

Tysabri produced $8.1 million in sales for the third quarter, including $5.4 million in the U.S. About 1,700 U.S. patients and 500 to 600 EU patients have received the drug, he said. Cooke added that Elan would be able to break even on the drug if approximately 15,000 patients worldwide are taking Tysabri.

Overall revenue slipped due to what Elan says were "temporary supply shortages" from a supplier for the antibiotic Maxipime. The drug's sales dropped to $26.4 million from $33.8 million for the year-ago quarter.

By late morning, Elan's stock was off 46 cents, or 3%, to $15.05.