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UPDATE 2-Elan ups earnings guidance, Q3 cost cuts impress

Published 10/21/2009, 05:11 AM
Updated 10/21/2009, 05:18 AM

* Raises FY EBITDA guidance, retains sales

* R&D and SG&A costs cut by 12 percent

* Q3 revenue rises 6 percent, missing forecasts

* Shares up 0.6 percent

(Adds detail, analyst comment)

DUBLIN, Oct 21 (Reuters) - Irish drugmaker Elan raised full-year earnings guidance after swinging to a profit in the third quarter, when tight cost control made up for sales growth falling short of expectations.

Elan said on Wednesday it expects full-year adjusted EBITDA (earnings before interest, tax, depreciation and amortisation) of around $75 million, putting a number for the first time on its previously positive expectations.

Analysts were most impressed with a 12 percent decrease in R&D and general administrative costs.

"They are a solid set of numbers with very good cost control within the existing business," Ian Hunter, analyst at Goodbodys Stockbrokers said.

"You're expecting revenues will continue to improve with the Tysabri franchise and if they're keeping their costs down, then you're into profit."

Shares in the Dublin-based company were up 1.2 percent at 4.50 euros by 0852 GMT, off a high of 4.70.

Elan's quarterly revenue rose 6 percent to $287 million, driven by a 19 percent jump in sales of its key multiple sclerosis drug Tysabri. Four analysts polled by Reuters expected an average increase to $301 million.

Elan reiterated its full-year 2009 guidance for double-digit percentage revenue growth.

"They more than made up for that in the control of their R&D costs and general administrative costs," Goodbody's Hunter said of the lower-than-forecast quarterly revenues.

Elan posted basic and diluted income per share of 14 U.S. cents for the three months to the end of September, versus a loss of 18 cents last year after it completed a deal to sell an 18.4 percent stake to U.S. company drugs major Johnson & Johnson .

Elan said that the $885 million deal, along with a proposed debt tender offer, reduced its net debt by approximately 60 percent to $600 million.

Johnson & Johnson cut the amount it payed for the stake by $115 million after a dispute between Elan and its U.S. partner Biogen Idec Inc, with which it sells Tysabri in a 50-50 partnership.

Elan said sales of Tysabri increased 16 percent to $191.4 million in the third quarter as it added 2,900 patients worldwide to the therapy, compared to the 3,400 added in the second quarter.

Shares in Biogen fell more than 2 percent over concerns on Tysabri when it reported quarterly figures on Tuesday. (Reporting by Padraic Halpin; editing by Hans Peters)

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