BioWorld International Correspondent

DUBLIN, Ireland - Elan Corp. plc, the debt-laden Irish drug delivery and development company, is setting out its stall as a drug discovery specialist focused on neurology, pain and autoimmune diseases.

The Dublin-based company outlined a turnaround plan when reporting its second-quarter results last week. It is looking to cut its work force by 1,000, from its current level of 4,700 people, and to sell anything and everything outside of its three designated niches.

"These are our core competencies, and have been for quite some time. Most of our R&D pipeline centers around these areas," Chairman Garo Armen told a conference call audience. "We expect to file four NDAs by the end of 2004," he said.

Its lead development candidate, Antegren, is in Phase III clinical trials for both Crohn's disease and multiple sclerosis. Prialt is in Phase III trials for severe chronic pain, while Zonegran ER is in Phase II trials for migraine. The same compound also is in Phase II trials for mania, but Elan does not expect to submit an NDA for that indication until 2005 or 2006. A fifth development candidate, ELN 154088, is in Phase II trials for pain, and an NDA is slated for the fourth quarter of 2005. The company also expects to submit five investigational new drug applications by the end of next year, Armen said.

The company has increased its cash-raising target, which it hopes to reach via a series of asset disposals. It aims to raise US$1 billion over the next nine months and another $500 million by the end of next year. The company has not yet publicly identified the assets that can generate those cash levels.

Analyst Peter Frawley at Dublin-based Merrion Stockbrokers said he sees little value in Elan's portfolio of biotechnology investments, which the company built up at a cost of US$2 billion. "The value, I wouldn't say it's worthless, but it's getting close to that," he said.

Frawley said the best candidates for disposal include Elan's hospital products portfolio, which includes Abelcet, Maxipime and Azactam; its diagnostics business; and its drug delivery business. Although welcoming what he sees as "a commitment from the management to get the job done," Frawley is not yet convinced that executives can attain their goals. "I wouldn't be giving the management the benefit of the doubt at this stage," he said. "Even if those deals come through, you still have a very poor cash profile with the remaining company."

The company's cash reserves now stand at US$903 million, after recent debt repayments and a net outlay of US$82.5 million to acquire royalty to rights to Antegren from Autoimmune Disease Research & Development Corp. Ltd., one of the off-balance-sheet vehicles it created to share in the risk of developing the compound.

Its total debt obligations stand at around US$3.5 billion. Elan reported a net loss of US$802 million for the second quarter, including US$795.6 million in noncash charges for write-downs of investments and intangibles and cash charges of US$31 million related to restructuring, litigation and legal costs associated with the SEC. It posted US$456.1 million in revenues for the period.