Elan's Early Submission

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Forget that it keeps losing money. The news keeps getting better for Elan (NYSE: ELN).

This morning, the drug developer announced it would file for FDA approval of Antegren in mid-2004, a year earlier than expected. If approved, the highly touted multiple sclerosis treatment could be on the market by 2005.

Elan shares jumped a whopping 33% to $11.75 in afternoon trading, and Biogen Idec (Nasdaq: BIIB) -- its U.S. partner on the drug -- is up 20% to $53.23. Investors obviously view this as great news.

I'm reminded of a similar scenario just over a year ago, when Millennium Pharmaceuticals (Nasdaq: MLNM) announced it would file early for approval of cancer drug Velcade. Investors viewed the move as either a "whiff of desperation" to boost a sagging stock or an indication that the company was encouraged by the FDA to do so. At the time, the drug had just entered Phase III trials. As it turned out, Velcade has since been brought to market and now contributes to Millennium's revenues.

In this case, Elan and Biogen Idec's decision "was made after discussions with the FDA of one-year data from the two on-going two-year Phase III trials in MS." As such, one would think that Antegren stands a good chance for success.

Excitement over Antegren overshadowed Elan's earnings report. Year-over-year comparisons still look ugly because of its massive divestitures, but fourth-quarter revenue from retained products continued to grow, climbing 45% to $107.8 million. The company nonetheless reported negative earnings before interest, taxes, depreciation, and amortization (EBITDA) of $34.9 million and a net loss of $0.88 per share.

Last month, it was Prialt. This month, it's Antegren. Elan expects negative EBITDA again for 2004, but at least the news keeps getting better.

Give us your take on the Elan discussion board.

Jeff Hwang doesn't own any of the companies mentioned.