Operating profits. Positive earnings before interest and taxes. The anti-GM. No matter what you call it, that's what Elan
There are two ways to increase profits: increase revenue or keep costs in check. Elan is doing both.
The company's multiple sclerosis drug, Tysabri, continues to grow, albeit at a slower rate. Revenue from sales of Tysabri, which Elan sells with Biogen Idec
In order to reaccelerate growth, Elan and Biogen need to convince doctors and patients that the side effects do not outweigh the benefit of Tysabri over other multiple sclerosis drugs like Teva Pharmaceutical's
While sales of Tysabri will have the biggest affect on the future of Elan, the company has its hand in a few other potential big sellers. The Food and Drug Administration recently approved Acorda Therapeutics'
On the expenses side, Elan has lowered its SG&A expenses slightly and decreased R&D expenses considerably after partnering with Johnson & Johnson on its late-stage Alzheimer's disease program. Elan and Johnson & Johnson set up a joint venture with Elan's half of the program -- Pfizer owns the other half -- but Elan isn't responsible for paying half of the expenses until they hit $500 million.
It will nice to see Elan showing an operating profit, and it'll be even better if Elan can hit its goal of being cash-flow positive by the end of the year. Now all investors need is net profits and a few advancements in the pipeline. Only then will the drugmaker get close to the list of stocks to never sell.
