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  • Stillorgan1 Stillorgan1 Feb 2, 2005 4:51 AM Flag

    Davy Q4 and FY 2004 preview 1

    Given the solid work of Jack Gorman, I hope they won't mind if I spread the news a bit farther ...
    Here are the details behind the headline just mentioned.
    "Tysabri launch
    Anecdotal signs are positive
    The results will be the first time that Elan and BiogenIdec discuss in detail how the Tysabri launch is progressing. To date,
    there have been many anecdotal commentaries from the marketplace, neurologist surveys, etc. These have pointed to a
    strong initial performance from the product, with very favourable responses from practitioners and reimbursement agencies.
    Barriers to adoption, be they reimbursement or infusion centre availability, do not seem to have been prohibitive. But it
    remains too early to be definitive.
    Total prescriptions for the other MS products ex-Tysabri have not changed markedly since the product was launched at the
    end of November, allowing for the variance over the Christmas and New Year period (see Figure 1). Our IMS prescription
    monitor can only track Copaxone, Avonex, Rebif and Betaseron. While only a partial view on trends, it is a broad proxy for
    market share movements.
    This would suggest that Tysabri is being used either in combination or in the "quitters" segment of the market. Combination
    use, not exclusively with Avonex, has been reported. ...
    Some metrics to be revealed
    We expect some �hard data� to be revealed by Elan on the launch to date. Key metrics that we would find useful would be:
    � the number of patients on the drug;
    � the number of patients prescribed who have not yet begun therapy;
    � the split between monotherapy and combination therapy; and
    � the level of discounting off listed pricing.
    No formal guidance has been given on what data will be presented. Our January 2005 meeting in Boston with BiogenIdec
    indicated that both companies will attempt to direct the market towards broader long-term trend data rather than short-term
    measures. Both companies have been keen to play down initial expectations for Tysabri, given the near-term logistical and
    process issues associated with infusion centre availability and reimbursement.

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    • ELN announces what Still posted, that would be HUGE IMO.....especially the one below that I cut and pasted...As always. thank you Still!

      Remember 3 different Neuro's have posted within the last 5 days that scripts written are already 16,000!! Wooooo!

      We expect some �hard data� to be revealed by Elan on the launch to date. Key metrics that we would find useful would be:
      � the number of patients prescribed who have not yet begun therapy;

      • 1 Reply to cpneln
      • If the scripts written are now at 16,000 then the wave is just starting to swell. 16,000 patients in 8 weeks is a huge number, and already represents a $350m run rate. It looks like, even without EDSS and 2 year data, that current capacity could be tapped out in the Spring. That increases pressure on Biogen to get that new capacity on line in CA asap. If that capacity comes on line in June then the ramp can continue and we can see a $2.Xb run rate by year end. Nice.

    • Something that's been bothering me for some time is these reports of tysabri and avonex combination
      Tsyabri was developed and trialed as a monotherapy and the impressive results are documented
      It would seem to me that biib are in a win win situation and would actively promote this usage with 100% of one drug and 50% of the other
      Am I missing something?
      Swim

      • 1 Reply to swimmingwithpiranhas2002
      • Biogen Idec is acting in a way to protect and enhance the long-term interests of Biogen Idec, which will not always be the same as Elan's interests. I must admit to a little concern whether Biogen Idec's own detailing does not emphasize the combination of Avonex and Tysabri as much stronger than Tysabri alone. Cf. Dr. Ellen Lathi's remarks in the Tysabri launch call. From her description of the number of patients on Avonex (with practically none on Rebif), it sounded like a Boston praxis strongly influenced by Biogen Idec. Tysabri for the newer and "healthier" MS patients and combo therapy for the older patients. My concern here is the extra delay caused by combo reimbursement as well as the long-term strains on the reimbursement financing. Does the data really support this emphasis on combo or is it a form of protection for doctor (CYA) and patient?
        Also it is worth following the attention to the quitters market at the expense of longer delays in getting the drug to the present treated MS population which is clamoring for Tysabri? It could be that Biogen is thinking that they know great EDSS and two year data is coming, and they won't have any problem selling Tysabri this year, so why not maximize Avonex revenues at the same time?
        I also wonder whether the large numbers of the quitters market are really still accessible. Certainly Tysabri will expand the market, but my guess is that it will be a little bit less than 50% at these prices.
        Regardless, when the dust settles, there will be enough patients to sell the 2005 production of Tysabri.

    • AFFIRM data soon?
      Though it is possible, we do not expect Elan to report anything from the two-year AFFIRM study at results time. The plan
      remains to present this data at the American Academy of Neurology (AAN) on April 9th�16th as late breaking news.
      Interestingly, the abstract deadline for such submissions to AAN is February 9th, the day after results.
      Elan may take the opportunity to announce headline results from AFFIRM ahead of the AAN presentation. These may just
      reveal whether it has met the primary endpoint, its impact on the progression of disability in MS.
      2005 guidance
      We also expect that Elan will provide guidance on the outturn for 2005. This may just focus on headline figures such as
      revenues, EBITDA and EPS. But assumptions on Tysabri will form the main basis for this guidance.
      Our existing 2005 forecasts anticipate a strong first year for Tysabri, with forecast revenue of $288m. This forecast was
      initially built on a lower price point ($18,500) than that ultimately chosen ($23,500), so this higher pricing underpins our
      forecast.
      An out-turn of $288m at listed pricing would imply average patient numbers for 2005 of 12,000�13,000; this would crudely
      require year-end numbers to approach 25,000.
      Elan books US revenue for Tysabri on its P&L. Our forecasts assume that EU revenues will only flow meaningfully in 2006.
      Cost of sales is forecast at 28%, including manufacturing costs and royalty payments. Our 2005 forecasts anticipate that
      $100m will be spent on R&D and $144m on SG&A costs for Tysabri�and that Elan shares this 50/50 with BiogenIdec.
      Blending these assumptions into our overall 2005 forecast, we expect the scale of operating losses to reduce significantly
      from $371m (2004F) to $219m. Higher interest costs from its $1.15bn notes offering offsets some of this at the attributable
      losses line.
      Note that Prialt, which is also in launch phase, is forecast to generate revenues of $20m in 2005. With the right commercial
      positioning, Prialt could exceed our $75m peak revenue projection.
      Our existing 2005�2009 forecasts are summarised in Table 1. Management guidance on 2005 should leave us better placed
      to model Tysabri revenues, and associated costs, over the period. As it stands, the leveraging impact of increased Tysabri
      revenues should mean Elan returns to profitability during 2006, notwithstanding the higher interest costs from the recent
      notes offering.
      Table 1: Elan forecasts summary, YE December 2005�2009 ($m)
      FY 2005 FY 2006 FY 2007 FY 2008 FY 2009
      Revenues 757.1 1372.6 2071.7 2793.9 3117.7
      � of which Tysabri *
      288.1 880.6 1538.9 2300.5 2684.7
      EBITDA �141.0 94.4 379.7 729.7 975.7
      Operating profit
      �219.0 16.6 301.7 617.7 863.7
      PBT �388.2 �152.6 132.5 448.5 728.3
      Diluted adjusted EPS (c)
      �99 �39 34 104 162
      * includes end-user revenues in US and ancillary/profit-share payments from outside US
      Source: Davy

      • 2 Replies to Stillorgan1
      • What strikes after a quick reading of this report is that Jack Gorman has also hinted in several places of a strong upside to his current figures.
        For example:
        "Our existing 2005 forecasts anticipate a strong first year for Tysabri, with forecast revenue of $288m. This forecast was
        initially built on a lower price point ($18,500) than that ultimately chosen ($23,500), so this higher pricing underpins our forecast.
        An out-turn of $288m at listed pricing would imply average patient numbers for 2005 of 12,000�13,000; this would crudely
        require year-end numbers to approach 25,000."
        // If Tysabri already has over 12,000 prescriptions written, then these numbers will be radically ramped upward. Gorman also notes that the abstract submission day for the American Academy of Neurology meeting is only one day after Elan announces results.
        Also "Note that Prialt, which is also in launch phase, is forecast to generate revenues of $20m in 2005. With the right commercial positioning, Prialt could exceed our $75m peak revenue projection."
        -- So there is also room for upside on Prialt.

      • Q4 and 2004 results preview
        Q4 forecasts
        We forecast ongoing product revenue of $75.5m, which comprises Maxipime ($33m, +5% yoy), Azactam ($12.5m, +16%
        yoy), and contract manufacturing/royalties ($30m, +30% yoy). Prior-year comparisons are soft in the case of
        manufacturing/royalties but tougher in the case of Maxipime.
        Elan will book some Tysabri revenues in Q4, though management does not expect this to be significant (i.e. less than $10m).
        Contract research revenues are forecast at $18m (versus $11.2m last year). So total revenues including unamortised revenues
        (Adalat, Avinza) and $5m of Tysabri revenues is forecast at $107m.
        Operating costs in Q4 are mostly clean of recovery-plan-related impacts, but will include SG&A spend associated with the
        Tysabri launch. SG&A costs are forecast at $90m, up from $77.8m in Q3. R&D costs are forecast at $73m, after a sharp
        though temporary dip to $55.5m in the September quarter.
        EBITDA losses for the quarter are forecast at $84.3m, and on this basis operating cash outflows (post interest, tax, working
        capital) could exceed $100m. Loss per share is forecast at 33c.
        Elan will record an investment gain of $43.6m in the quarter to reflect the divestment of its holding in Warner Chilcott.
        Full-year management guidance
        Elan reiterated its 2004 guidance at the Q3 conference call. Table 2 compares it with our own full-year expectations.
        Table 2: Elan 2004 guidance and Davy forecasts ($m)
        Elan guidance Davy forecast
        Product revenues (incl. discontinued)
        400�440 399.7
        Contract revenues (incl. discontinued)
        75�85 78.6
        Overall revenues 475�525 478.3
        EBITDA losses 220�240 209.3
        Source: Elan; Davy

 
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