IHS Global Insight Perspective | |
Significance | The latest clinical and strategic developments from Elan will see the company progress with the development of a key Alzheimer's drug that has received mixed results thus far. Separately, the company has decided against proceeding with business separation activities in the short term. |
Implications | ELND005 will now only be developed in a single-dosage form, following adverse event reports for the higher-dosage forms of the drug. The postponement of the EDT/BioNeurology split stems from the less-than-conducive market environment. |
Outlook | No timetable has been provided for the Phase III development of ELND005, but this should be revealed once regulatory-related discussions are completed. The EDT/BioNeurology split still remains a long-term vision for Elan, and it is likely that the company will proceed once market conditions are more favourable. |
Mixed Results for Alzheimer's Drug
Irish pharmaceutical company Elan has reported the results of a Phase II study for ELND005 (scyllo-inositol) for the treatment of mild-to-moderate Alzheimer's disease. The study, known as AD201, looked at patients with mini mental-state examination (MMSE) scores of between 16 and 26, over a period of 18 months. Patients were given twice-daily doses of one of three dosage strengths of the investigational drug: 250 mg, 1000 mg, or 2000 mg. According to the results, the 250-mg dosage of the drug demonstrated biological effects on amyloid-beta protein in the cerebrospinal fluid, as well as some effects on clinical endpoints. Less favourable results were reported for higher dosage forms of the drug, and as a result, these two arms of the study were discontinued due to serious adverse events, including deaths. Elan has emphasised that no direct link was established between the deaths and the drug. Although the 250-mg dosage of ELND005 failed to meet statistically significant cognitive and functional co-primary endpoints, the form of the drug will progress into Phase III development, said the company. The full results of the study will be published in a peer-reviewed publication some time in the future.
Strategic Split Postponed But Debt-Reduction Plans Revealed
Separately, the company has also provided an update on current measures that it will undertake in a bid to improve its financial position and drive growth. These measures include debt reduction and the potential to leverage growth by splitting its main operational units—Elan Drug Technologies (EDT) and BioNeurology—into standalone units. On the issue of debt reduction, Elan said that in the short term it expects to settle debts in the region of US$500 million when the debt is due to mature in November 2011 and November 2013. This will be facilitated via cash reserves and potential refinancing mechanisms. It aims to reduce overall gross debt by US$300 million, or 20%. The recent deal with U.S. pharma giant Johnson & Johnson had already provided the company with additional funds to facilitate early debt repayment in the region of U$225 million, which was processed in September 2009. As a result, over the last 12 months, its debt has reduced by 30%, generating interest savings of between US$5 million and US$10 million.
In terms of plans to split its EDT and BioNeurology businesses, following a strategic review, the company has concluded that although it makes strategic and financial sense to proceed with this endeavour, current market conditions mean that the timing is not appropriate. In particular, the company feels that given the current climate, an appropriate valuation is unlikely.
Outlook and Implications
The results of the Phase II AD201 study are largely in line with expectations. The company announced in December 2009 that 1000-mg and 2000-mg dosage levels for ELND005 would be shelved following discussions with the Independent Safety Monitoring Committee in response to the emergence of serious adverse events and nine deaths (see Ireland: 16 December 2009: Future of Elan and Transition Therapeutics' AD Drug in Doubt After Nine Deaths in Clinical Trials). Following this announcement, the future of the drug appeared to be severely compromised. It will therefore come as good news that Elan has managed to salvage some potential from the drug, despite the fact that it failed to meet co-primary endpoints. Another Elan Alzheimer's drug, bapineuzumab, has also met a similar fate; however, clinical development is still underway for the 1-mg/kg and 0.5-mg/kg lower dosage forms of the drug. The company has not provided a timeline for when Phase III development for ELND005 is expected to commence, as this will depend on the regulatory go-ahead.
In terms of the stalling of the BioNeurology and EDT split, this comes as little surprise, as the company had indicated earlier that this will largely depend on market conditions (see Ireland: 19 April 2010: Elan May Separate Core Business Activities). Given Elan's deteriorated financial position, especially in terms of its bottom-line performance over the first half of the year, with net loss increasing by 25.9% to US$215.1 million, it makes sense for the company to put this strategic move on hold. In terms of the outlook for the rest of the year, the company expects to achieve revenue growth in excess of that for 2009; however, it is likely that the recent Zonegran settlement will weigh down its bottom-line in the short term (see Ireland: 19 July 2010: Elan to Set Aside US$206.3 Mil. to Settle Zonegran Probe).