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Elan Corporation reported a loss of 12 cents per share from its continuing operations in the first quarter of 2013, narrower than the year-ago loss of 13 cents per share. Elan’s first quarter of 2013 revenues from continuing operations remained flat at $0.2 million.

However, the company reported earnings of 11 cents per share from its total operations (including discontinued operations), compared to a loss of 5 cents in the year-ago quarter. The company’s total revenues during the reported quarter from its total operations came in at $344 million, up 19.4% year over year.

Earnings and revenue as per the Zacks Consensus Estimate were 7 cents per share and $318 million, respectively.

Quarter in Detail

During the reported quarter, selling, general and administrative (SG&A) expenses decreased 3.3% to $29 million. Research and development (R&D) expenses came in at $19.4 million, down 28.4% from the year-ago quarter.

2013 Outlook

Elan expects total operating expenses in 2013 in the range of $170 million to $190 million.

The company also expects to contribute around $60–$80 million to Janssen AI, a subsidiary of Johnson & Johnson (JNJ - Analyst Report), during 2013. Out of the expected contribution to Janssen, $30 million was paid in January this year. The company is left with funding commitment of $93.2 million to Janssen AI.

Tysabri Transaction

Meanwhile, Elan closed its Tysabri (natalizumab) collaboration transaction with Biogen Idec earlier this month. Biogen paid an upfront payment of $3.25 billion to Elan. As a result, Biogen gained full strategic, commercial, and operational control over the drug.

Elan will be receiving a 50% share of Tysabri profits as revenue for the month of April this year and will be receiving continuing royalties in the future. Elan is eligible to receive a royalty payment of 12% on worldwide net sales of Tysabri (for all indications) for the first year. After the first year, Elan will receive a royalty of 18% on up to $2 billion of global net sales of Tysabri and 25% thereafter.

Other Updates

Elan recently turned down Royalty Pharma's offer to acquire all the shares of Elan for $11.25 or less per share. Elan’ Board of Directors believed that Royalty Pharma’s offer significantly undervalued the company’s current business platform and its future prospects. The Board was unanimous in rejecting the offer.

Elan, a biotechnology company, currently carries a Zacks Rank #3 (Hold). Currently, well-placed biotech stocks include Zacks Ranked #1 (Strong Buy) WuXi PharmaTech (WX - Snapshot Report).
 

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