Pharmaceutical company Elan has announced plans to restructure its debt. The company has also temporarily shelved plans to spin off its drug delivery business due to unfavourable market conditions.
Elan, in which Johnson & Johnson has an 18% stake, reaffirmed its financial outlook for this year.
The company, along with development partner Transition Therapeutics, also said it planned to launch an important next phase trial of an experimental Alzheimer's drug, called ELND005, even though a mid-stage trial did not achieve its goals.
Elan said it still aimed to eventually sell the drug delivery division, Elan Drug Technologies, but said market conditions were not conductive to an appropriate valuation. The company first tried to sell the business in 2008, but failed after the economic crisis led to a financing drought.
The company, which makes the multiple sclerosis drug Tysabri in partnership with US biotechnology company Biogen Idec, said it planned to retire up to $500m in debt due in November 2011 and November 2013 through a combination of cash and refinancing.
For 2010, the company still expects annual revenue growth and adjusted earnings before interest, taxes, depreciation and amortisation of more than $150m. It expects to end the year with close to $400m in cash and investments, after the debt repayments.
Elan said it would reduce gross debt by around 20% to about $1.24 billion from $1.54 billion and reduce annual interest costs by $5m to $10m. It also said the $615m due in November 2013 may be reduced by up to $190m.
After earlier gains, Elan shares closed flat at €4.04 in Dublin this evening.
