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IRSH: Elan Corporation PLC: Elan Reports First Quarter 2013 Financial Results



  IRSH: Elan Corporation PLC: Elan Reports First Quarter 2013 Financial
  Results

UK Regulatory Announcement

DUBLIN

Elan Corporation, plc today reported its first quarter 2013 financial results.

Mr. Kelly Martin, CEO, said, “Activity in the first quarter of 2013 was
primarily strategic and consistent with the principles that have guided us for
nearly a decade. Those principles include reducing uncontrollable risk where
possible; taking calculated risk where the probabilities look favorable;
diversifying across science, therapeutics and geographies; avoiding
unnecessary infrastructure; properly balancing current income and growth with
investment in future growth potential; and using our Irish-based global
financial structure to pursue opportunities which create long-term value for
shareholders.”

Mr. Martin added, “Over the past year we have engaged with many companies
around the world. By combining these discussions and relationships with our
core principles, we are confident that these discussions will deliver
significant value-creating opportunities for Elan and our shareholders. To
that end, I very much look forward to sharing the depth and breadth of those
specific opportunities, directly to our shareholders, in due course.”

Mr. Nigel Clerkin, chief financial officer, said, “the completion of the
Tysabri transaction earlier this month, followed by the $1.0 billion share
buyback and the retirement of our bonds, have collectively transformed our
capital structure, and provide the platform to transform our business
structure. As a result of these transactions, we have eliminated our debt, and
have reduced our sharecount by approximately 15%. We have also initiated a
dividend policy, under which we will pay 20% of our Tysabri royalties as a
twice-yearly dividend to shareholders. We now have approximately $2 billion in
cash and cash equivalents, which provides us with substantial capacity to
execute on transactions to diversify our business and grow shareholder value.”

Unaudited Consolidated U.S. GAAP Income Statement Data
                                                            Three Months Ended
                                                            March 31
                                                            2012       2013
                                                                     
                                                            US$m       US$m
Continuing Operations (see page 7)                                   
Revenue                                                     0.2        0.2
Cost of goods sold                                          0.1        —
Gross margin                                                0.1        0.2
                                                                        
Operating Expenses (see page 7)
Selling, general and administrative                         30.0       29.0
Research and development                                    24.9       19.4
Other net charges (see page 8)                              2.0        18.7
Total operating expenses                                    56.9       67.1
Operating loss                                              (56.8)     (66.9)
                                                                        
Net Interest and Investment Gains and Losses (see page 9)
Net interest expense                                        16.8       9.1
Net loss on equity method investments                       15.9       14.9
Net interest and investment gains and losses                32.7       24.0
                                                                        
Net loss from continuing operations before tax              (89.5)     (90.9)
Benefit from income taxes                                   (14.8)     (18.1)
Net loss from continuing operations                         (74.7)     (72.8)
                                                                        
Discontinued Operations
Net income from discontinued operations, net of tax (see    42.9       136.1
page 10)
Net income/(loss)                                           (31.8)     63.3
                                                                        
Basic and diluted net loss per ordinary share -             (0.13)     (0.12)
continuing operations
Basic and diluted net income per ordinary share –           0.07       0.23
discontinued operations
Basic and diluted net income/(loss) per ordinary share –    (0.05)     0.11
total operations
Basic and diluted weighted average number of ordinary
shares outstanding (in millions) – continuing,              590.8      596.7
discontinued and total operations
                                                                        

Unaudited Non-GAAP Financial Information – Adjusted EBITDA
 
                Non-GAAP Financial Information              Three Months Ended
                                                           
                Reconciliation Schedule                     March 31
                                                            2012       2013
                                                                     
                                                            US$m       US$m
                                                                     
Net income/(loss)                                           (31.8)     63.3
Net (income)/loss from discontinued operations:
Net income from Tysabri                                     (70.9)     (93.4)
Net loss from Prothena                                      7.5        0.5
Net loss/(income) from Elan Drug Technologies               20.5       (43.2)
(EDT)/Alkermes
Net loss from continuing operations                         (74.7)     (72.8)
Net interest expense                                        16.8       9.1
Benefit from income taxes                                   (14.8)     (18.1)
Depreciation and amortization                               3.3        1.1
Amortized fees                                              (0.1)      (0.1)
EBITDA from continuing operations                           (69.5)     (80.8)
Share-based compensation                                    10.9       7.9
Other net charges                                           2.0        18.7
Net loss on equity method investments                       15.9       14.9
Adjusted EBITDA from continuing operations ^ (1)            (40.7)     (39.3)
                                                                        

^(1) A reconciliation of Adjusted EBITDA from discontinued operations to net
income/(loss) from discontinued operations for the three months ended March
31, 2012 and 2013 is set out in Appendix I.

To supplement its consolidated financial statements presented on a U.S. GAAP
basis, Elan provides readers with Adjusted EBITDA, a non-GAAP measure of
operating results. Adjusted EBITDA is defined as net income/(loss) plus or
minus net income or loss from discontinued operations, net interest expense,
benefit from income taxes, depreciation and amortization of costs and revenue,
share-based compensation, other net charges, and net loss on equity method
investments. Adjusted EBITDA is not presented as, and should not be considered
an alternative measure of operating results or cash flows from operations, as
determined in accordance with U.S. GAAP. Elan’s management uses Adjusted
EBITDA to evaluate the operating performance of Elan and its business and this
measure is among the factors considered as a basis for Elan’s planning and
forecasting for future periods. Elan believes Adjusted EBITDA is a measure of
performance used by some investors, equity analysts and others to make
informed investment decisions. Adjusted EBITDA is used as an analytical
indicator of income generated to service debt and to fund capital
expenditures. Adjusted EBITDA does not give effect to cash used for interest
payments related to debt service requirements and does not reflect funds
available for investment in the business of Elan or for other discretionary
purposes. Adjusted EBITDA, as defined by Elan and presented in this press
release, may not be comparable to similarly titled measures reported by other
companies. A reconciliation of Adjusted EBITDA to net income/(loss) is set out
in the table above titled, “Non-GAAP Financial Information Reconciliation
Schedule”.

Unaudited Consolidated U.S. GAAP Balance Sheet Data
                                                                    
                                                     December 31     March 31

                                                     2012            2013

                                                     US$m            US$m
Assets
Current Assets
Cash and cash equivalents                            431.3           556.1
Restricted cash and cash equivalents — current       2.6             15.4
Investment securities — current                      167.9           22.3
Held for sale assets                                 220.1           195.2
Deferred tax assets — current                        380.9           382.5
Other current assets                                 206.7           224.8
Total current assets                                 1,409.5         1,396.3
                                                                      
Non-Current Assets
Intangible assets, net                               99.0            98.0
Property, plant and equipment, net                   12.7            9.2
Equity method investments                            14.0            18.0
Investment securities — non-current                  8.6             8.7
Deferred tax assets — non-current                    64.6            64.6
Restricted cash and cash equivalents — non-current   13.7            0.9
Other assets                                         18.1            18.0
Total Assets                                         1,640.2         1,613.7
                                                                      
Liabilities and Shareholders’ Equity
Accounts payable, accrued and other liabilities      422.0           331.5
Long-term debt                                       600.0           600.0
Shareholders’ equity                                 618.2           682.2
Total Liabilities and Shareholders’ Equity           1,640.2         1,613.7
                                                                      

Movement in Shareholders’ Equity
                                             US$m
Balance at December 31, 2012                 618.2
Net income for the period                    63.3
Share-based compensation                     8.8
Issuance of share capital                    12.6
Available for sale investment securities     (19.1)
Share repurchase costs                       (2.5)
Other                                        0.9
Balance at March 31, 2013                    682.2
                                              

Unaudited Consolidated U.S. GAAP Cash Flow Data
 
                                                            Three Months Ended
                                                           
                                                            March 31
                                                            2012       2013
                                                                     
                                                            US$m       US$m
                                                                     
Adjusted EBITDA from continuing operations                  (40.7)     (39.3)
Adjusted EBITDA from discontinued operations^(1)            87.0       116.9
Net interest and tax                                        (14.7)     (11.8)
Other net charges                                           (1.4)      (22.0)
Working capital increase                                    (36.2)     (71.4)
Cash flows used in operating activities                     (6.0)      (27.6)
                                                                        
Net purchases of tangible and intangible assets             (4.5)      (0.9)
Net proceeds from sale of Alkermes shares                   380.9      169.7
Net purchase of investments                                 (0.2)      (0.1)
Funding provided to equity method investment (Janssen AI)   —          (29.9)
Cash flows from financing activities                        5.0        13.6
Net cash movement                                           375.2      124.8
Beginning cash balance                                      271.7      431.3
Cash and cash equivalents at end of period                  646.9      556.1
                                                                        

^(1) A reconciliation of Adjusted EBITDA from discontinued operations to net
income/(loss) from discontinued operations for the three months ended March
31, 2012 and 2013 is set out in Appendix I.

Overview

The net income for the first quarter of 2013 of $63.3 million (2012: net loss
of $31.8 million) includes a net loss from continuing operations of $72.8
million (2012: $74.7 million) (see page 7), and net income from discontinued
operations of $136.1 million (2012: $42.9 million) related to the Tysabri,
Prothena and EDT businesses (see page 10 and Appendix I).

Tysabri^® Transaction

On April 2, 2013, Elan completed the previously announced Tysabri Transaction
(see page 10). In accordance with the terms of the transaction, the existing
collaboration arrangements with Biogen Idec Inc (Biogen Idec) terminated, and
Biogen Idec paid an upfront payment of $3.25 billion to Elan, and will pay
continuing royalties on Tysabri in-market sales.

Share Repurchase, Debt Redemption, and Dividend Program

On April 18, 2013, Elan announced the results of the $1.0 billion Dutch
Auction share repurchase program (the “Share Repurchase”). The Share
Repurchase resulted in the purchase of 88.9 million shares at $11.25 per
share, and reduced the number of shares in issue by approximately 15%, to
approximately 510.0 million.

On April 2, 2013, an irrevocable Notice of Redemption was issued to redeem all
of the $600.0 million in aggregate principal amount of outstanding 6.25%
Senior Notes due 2019 (6.25% Notes), for a total redemption payment of $706.7
million plus accrued and unpaid interest. The redemption is expected to occur
on May 2, 2013. Elan will record a net charge on debt retirement of
approximately $119 million in the second quarter of 2013, including a non-cash
write-off of approximately $11 million related to unamortized deferred
financing costs.

Additionally, on March 4, 2013, Elan announced the commencement of a cash
dividend program, under which 20% of the Tysabri royalties to be paid to Elan
by Biogen Idec under the Tysabri Transaction will be paid to shareholders as a
twice-yearly dividend. Elan expects to pay the first dividend in the fourth
quarter of 2013, in respect of royalties earned in the first half of 2013.

Pro Forma Liquidity

The following table sets out Elan’s cash and cash equivalents at March 31,
2013, and pro forma for the completion of the Tysabri Transaction, the Share
Repurchase and the Debt Redemption:

                                              US$m
Cash and cash equivalents at March 31, 2013   556.1
                                               
Pro forma adjustments:
Tysabri Transaction                           3,185.0 ^1
Share Repurchase                              (1,015.0) ^2
Debt Redemption                               (728.7) ^3
Pro forma cash and cash equivalents           1,997.4
                                               

^1 Sales proceeds of $3.25 billion less estimated transaction costs of $35
million and estimated cash taxes of $30 million.

^2 Share repurchase cost of $1.0 billion, estimated cash taxes of $10 million
and estimated transaction costs of $5 million.

^3Principal amount of 6.25% Notes of $600.0 million, redemption premium of
$106.7 million and accrued and unpaid interest and other cash debt retirement
costs of $22.0 million.

Continuing Operations

As a consequence of the Tysabri Transaction, the results of Tysabri that are
included in the Consolidated Income Statement for the first quarter of 2013
are presented as a discontinued operation, and the comparative amounts have
been restated to reflect this classification. Consequently, Elan’s first
quarter net loss from continuing operations of $72.8 million (2012: $74.7
million) does not reflect any revenues or costs associated with Tysabri.

Under the Tysabri Transaction agreement, Elan will receive as revenue a 50%
share of Tysabri profits for the month of April, after which Elan will receive
the continuing royalties. These receipts will be recorded as revenue within
continuing operations. The continuing royalties include a royalty of 12% of
global net sales of Tysabri for 12 months from May 2013. Thereafter, we will
earn a royalty of 18% of global net sales up to $2.0 billion each year, and a
25% royalty on annual global net sales above $2.0 billion.

Operating loss excluding other net charges for the first quarter of 2013
decreased to $48.2 million, from $54.8 million for the first quarter of 2012.
Adjusted EBITDA losses from continuing operations were $39.3 million for the
first quarter of 2013, compared to $40.7 million for the first quarter of
2012. These decreases reflect reduced operating expenses, principally due to
the operations restructuring during 2012.

SG&A expenses decreased to $29.0 million for the first quarter of 2013, from
$30.0 million for the same period of 2012, primarily as a result of lower
costs due to the closure of the South San Francisco facility during the
quarter, partially offset by higher business development costs.

R&D expenses decreased by 22% for the first quarter of 2013 to $19.4 million
from $24.9 million for the same period of 2012. This decrease reflects the
impact of the operations restructuring during the fourth quarter of 2012.

Other net charges

Other net charges for the three months ended March 31, 2013 and 2012 were as
follows:

                                                Three Months Ended
                                               
                                                March 31
                                                2012        2013
                                                         
                                                US$m        US$m
Severance, restructuring and other costs        1.4         4.4
Facilities and other asset impairment charges   0.6         1.0
Acquired IPR&D charge                           —           12.5
Advisory costs                                  —           0.8
Other charges                                   2.0         18.7
                                                             

In the first quarter 2013, other net charges include severance, asset
impairment and other restructuring charges of $5.4 million associated with the
closure of the South San Francisco facility and related reduction in
headcount.

Other net charges for the first quarter of 2013 also include an acquired IPR&D
(in process research and development) charge of $12.5 million related to a
payment made to Intarcia Therapeutics, Inc. (Intarcia), to help fund
Intarcia’s Phase 3 clinical trial of its lead product candidate for the
treatment of Type 2 Diabetes. In addition, we incurred advisory costs of $0.8
million which primarily related to Royalty Pharma’s offer for the entire share
capital of Elan.

Net Interest and Investment Gains and Losses

Net interest expense

For the first quarter of 2013, net interest expense decreased by 46% to $9.1
million, from $16.8 million for the first quarter of 2012. This decrease is
primarily due to the debt refinancing transactions in the fourth quarter of
2012.

Net loss on equity method investments

The losses on equity method investments for the three months ended March 31,
2013 and 2012 can be analyzed as follows:

                                        Three Months Ended
                                       
                                        March 31
                                        2012        2013
                                                 
                                        US$m        US$m
Janssen AI                              14.8        14.1
Proteostasis                            1.1         0.8
Net loss on equity method investments   15.9        14.9
                                                     

Janssen AI

As part of Elan’s 2009 transaction with Johnson & Johnson, Janssen AI, a
subsidiary of Johnson & Johnson, acquired substantially all of Elan’s assets
and rights related to its Alzheimer’s Immunotherapy Program (AIP)
collaboration with Wyeth (which has been acquired by Pfizer). Under the terms
of this transaction, Johnson & Johnson provided an initial $500.0 million
funding to Janssen AI and Elan has a 49.9% shareholding in Janssen AI. Any
additional funding in excess of the initial $500.0 million funding commitment
is required to be funded equally by Elan and Johnson & Johnson up to a maximum
additional commitment of $400.0 million in total.

During the first quarter of 2013, Elan provided funding of $29.9 million to
Janssen AI. Following the provision of this funding, Elan’s remaining funding
commitment to Janssen AI is $93.2 million. Elan recorded a net loss of $14.1
million on the equity method investment during the first quarter of 2013,
relating to its share of the losses of Janssen AI.

Proteostasis

Elan made a $20.0 million equity investment in Proteostasis Therapeutics, Inc
(Proteostasis) in May 2011, which represents approximately 22% of the equity
of Proteostasis. The net loss recorded on the equity method investment in the
first quarter of 2013 was $0.8 million.

Discontinued Operations

Net income from discontinued operations for the three months ended March 31,
2013 and 2012 includes the following:

                                                     Three Months Ended
                                                    
                                                     March 31
                                                     2012        2013
                                                               
                                                     US$m        US$m
Tysabri                                              70.9        93.4
Prothena                                             (7.5)       (0.5)
EDT/Alkermes                                         (20.5)      43.2
Net income from discontinued operations, after tax   42.9        136.1
                                                                  

The net income and Adjusted EBITDA from discontinued operations for the three
months ended March 31, 2013 and 2012 are set out in detail in Appendix I.

Tysabri

On April 2, 2013, Elan completed the asset purchase transaction with Biogen
Idec, which was announced on February 6, 2013, whereby Elan transferred to
Biogen Idec all Tysabri IP and other assets related to Tysabri (the “Tysabri
Transaction”). In accordance with the terms of the Tysabri Transaction, the
existing collaboration arrangements with Biogen Idec terminated and Biogen
Idec paid an upfront payment of $3.25 billion to Elan and will pay continuing
royalties on Tysabri in-market sales. Under the agreement, Elan will receive
as revenue a 50% share of Tysabri profits for the month of April, after which
Elan will receive the continuing royalties. These receipts will be recorded as
revenue within continuing operations. The continuing royalties include a
royalty of 12% of global net sales of Tysabri for 12 months from May 2013.
Thereafter, we will earn a royalty of 18% of global net sales up to $2.0
billion each year, and a 25% royalty on global net sales above $2.0 billion.

The assets of the Tysabri business have been presented as held for sale as of
March 31, 2013. The major classes of assets presented as held for sale are as
follows:

                          December 31,   March 31,
                          2012           2013
                          US$m           US$m
Held for sale assets                    
Goodwill                  110.8          110.8
Other intangible assets   84.4           84.4
Inventory                 24.9           —
Total                     220.1          195.2
                                          

Elan will record a gain on the divestment of Tysabri of approximately $2.5
billion during the second quarter of 2013, net of a non-cash tax charge of
approximately $500 million.

Tysabri Revenue

For the first quarter of 2013, revenue increased by 19% to $344.0 million from
$288.2 million for the first quarter of 2012.

                                          Three Months Ended
                                         
                                          March 31
                                          2012        2013
                                                   
                                          US$m        US$m
                                                   
Tysabri – U.S.                            201.0       257.4
Tysabri – Rest of world (ROW)             87.2        86.6
Total revenue – discontinued operations   288.2       344.0
                                                       

Global in-market net sales of Tysabri can be analyzed as follows:

                                    Three Months Ended
                                   
                                    March 31
                                    2012        2013
                                             
                                    US$m        US$m
United States                       201.0       257.4
ROW                                 198.0       198.6
Total Tysabri in-market net sales   399.0       456.0
                                                 

For the first quarter of 2013, Tysabri global in-market net sales increased by
14% to $456.0 million from $399.0 million for the same period of 2012.

In the United States, in-market sales increased by 28% to $257.4 million,
reflecting increased demand and an increase in channel inventory related to
transition arrangements in connection with the Tysabri Transaction, as well as
the impact of price increases.

ROW in-market net sales increased slightly in the first quarter of 2013 to
$198.6 million, from $198.0 million for the same period of 2012, principally
reflecting increased demand, offset by unfavorable price movements.

Biogen Idec deferred $13.9 million of revenue recognized on in-market net
sales of Tysabri in Italy during the first quarter of 2013 (2012: $16.5
million), having previously deferred $64.0 million of revenue in Italy during
2012 and $13.8 million during the fourth quarter of 2011. The revenue reserve
for Italy relates to a notification received by Biogen Idec from the Italian
National Medicines Agency during the first quarter of 2011, stating that sales
of Tysabri had exceeded a limit established by the agency in 2007. Biogen Idec
filed an appeal in December 2011 seeking a ruling that Biogen Idec’s
interpretation is valid and that the position of the agency is unenforceable.

Tysabri was developed in collaboration with Biogen Idec, Inc. (Biogen Idec).
Prior to completion of the Tysabri Transaction, Tysabri was marketed in
collaboration with Biogen Idec and, subject to certain limitations imposed by
the parties, Elan shared with Biogen Idec most of the development and
commercialization costs for Tysabri. Biogen Idec was responsible for
manufacturing the product. In the United States, Elan purchased Tysabri from
Biogen Idec and was responsible for distribution. Consequently, Elan recorded
as revenue the net sales of Tysabri in the U.S. market. Elan purchased product
from Biogen Idec at a price that included the cost of manufacturing, plus
Biogen Idec’s gross margin on Tysabri, and this cost, together with royalties
payable to other third parties, was included in cost of sales.

Outside of the United States, Biogen Idec was responsible for distribution and
Elan recorded as revenue its share of the profit or loss on these sales of
Tysabri, plus Elan’s directly-incurred expenses on these sales, which were
primarily comprised of royalties that Elan incurred and were payable by Elan
to third parties and were reimbursed by the collaboration.

As a result, in the ROW market, Elan recorded net revenue of $86.6 million for
the first quarter of 2013 compared to $87.2 million for the first quarter of
2012.

Elan’s net Tysabri ROW revenue is calculated as follows:

                                                            Three Months Ended
                                                           
                                                            March 31
                                                            2012       2013
                                                                     
                                                            US$m       US$m
ROW in-market sales by Biogen Idec                          198.0      198.6
ROW operating expenses incurred by the collaboration        (81.6)     (82.2)
ROW operating profit generated by the collaboration         116.4      116.4
Elan’s 50% share of Tysabri ROW collaboration operating     58.2       58.2
profit
Elan’s directly incurred costs                              29.0       28.4
Net Tysabri ROW revenue                                     87.2       86.6
                                                                        

Prothena

On December 21, 2012, Elan announced the completion of the spin-off to
shareholders of a substantial portion of its drug discovery business platform,
which is referred to as the “Prothena business”, into a new, publicly traded
company incorporated in Ireland named Prothena Corporation, plc (“Prothena”).
Elan retains an 18% equity holding in Prothena which has been recognized as an
available for sale investment.

The results of the Prothena business that are included in the Consolidated
Income Statement for the first quarter of 2012 are presented as a discontinued
operation. The net loss from discontinued operations for the first quarter of
2013 includes $0.5 million of transaction costs associated with the spin-off
of Prothena.

Elan Drug Technologies

In September 2011, Alkermes plc and Elan completed the merger between
Alkermes, Inc. and EDT, which combined to form Alkermes plc. In connection
with the transaction, Elan received $500.0 million in cash and 31.9 million
ordinary shares of Alkermes plc. Elan sold 76% (24.15 million ordinary shares)
of its shareholding in Alkermes plc in March 2012 and received net proceeds of
$380.9 million.

In February 2013, Elan sold the remaining 7.75 million ordinary shares of
Alkermes plc. and received proceeds of $169.7 million and recognized a
realized gain of $43.2 million.

The net loss from discontinued operations for the first quarter of 2012
includes a net loss on the Alkermes equity method investment of $7.2 million,
and a net loss on the disposal of the Alkermes plc ordinary shares in March
2012 of $13.3 million.

About Elan

Elan is a biotechnology company, headquartered in Ireland, committed to making
a difference in the lives of patients and their families by dedicating itself
to bringing innovations in science to fill significant unmet medical needs
that continue to exist around the world. For additional information about
Elan, please visit http://www.elan.com.

The Directors of Elan accept responsibility for the information contained in
this announcement. To the best of their knowledge and belief (having taken all
reasonable care to ensure such is the case); the information contained in this
announcement is in accordance with the facts and does not omit anything likely
to affect the import of such information.

Any holder of 1% or more of any class of relevant securities of Elan or of
Royalty Pharma may have disclosure obligations under Rule 8.3 of the Irish
Takeover Panel Act, 1997, Takeover Rules 2007 (as amended).

Forward-Looking Statements

This document contains forward-looking statements about Elan’s financial
condition, results of operations, business prospects, Tysabri and products in
development that involve substantial risks and uncertainties. You can identify
these statements by the fact that they use words such as “anticipate”,
“estimate”, “project”, “target”, “intend”, “plan”, “will”, “believe”, “expect”
and other words and terms of similar meaning in connection with any discussion
of future operating or financial performance or events. Among the factors that
could cause actual results to differ materially from those described or
projected herein are the following: as our principal source of revenue will be
a royalty on sales of Tysabri, the potential of Tysabri, which may be severely
constrained by increases in the incidence of serious adverse events (including
death) associated with Tysabri (in particular, by increases in the incidence
rate for cases of PML), or by competition from existing or new therapies (in
particular, oral therapies), and the potential for the successful development
and commercialization of products, whether internally or by acquisition,
especially given the separation of the Prothena business which left us with no
material pre-clinical research programs or capabilities; Elan’s ability to
maintain sufficient cash, liquid resources, and investments and other assets
capable of being monetized to meet its liquidity requirements; the success of
our development activities, and research and development activities in which
we retain an interest, including, in particular, the impact of the announced
discontinuation of the development of bapineuzumab intravenous in mild to
moderate Alzheimer’s disease; failure to comply with anti-kickback, bribery
and false claims laws in the United States, Europe and elsewhere; difficulties
or delays in manufacturing and supply of Tysabri; trade buying patterns; the
impact of potential biosimilar competition, the trend towards managed care and
health care cost containment, including Medicare and Medicaid; legislation and
other developments affecting pharmaceutical pricing and reimbursement
(including, in particular, the dispute in Italy with respect to Tysabri
sales), both domestically and internationally; failure to comply with Elan’s
payment obligations under Medicaid and other governmental programs; exposure
to product liability (including, in particular, with respect to Tysabri) and
other types of lawsuits and legal defense costs and the risks of adverse
decisions or settlements related to product liability, patent protection,
securities class actions, governmental investigations and other legal
proceedings; Elan’s ability to protect its patents and other intellectual
property; claims and concerns that may arise regarding the safety or efficacy
of Elan’s product candidates; interest rate and foreign currency exchange rate
fluctuations and the risk of a partial or total collapse of the euro;
governmental laws and regulations affecting domestic and foreign operations,
including tax obligations; whether we are deemed to be an Investment Company
or a Passive Foreign Investment Company; general changes in United States and
International generally accepted accounting principles; growth in costs and
expenses; and the impact of acquisitions, divestitures, restructurings,
product withdrawals and other unusual items. A further list and description of
these risks, uncertainties and other matters can be found in Elan’s Annual
Report on Form 20-F for the fiscal year ended December 31, 2012, and in its
Reports of Foreign Issuer on Form 6-K filed with the SEC. Elan assumes no
obligation to update any forward-looking statements, whether as a result of
new information, future events or otherwise.

Appendix I

Unaudited Financial Information – Net Income/(Loss) and Adjusted EBITDA from
Discontinued Operations for the three months ended March 31, 2012 and 2013

Three Months Ended                                   Three Months Ended

March 31, 2012                                       March 31, 2013
Tysabri Prothena   EDT      Total                    Tysabri   Prothena   EDT      Total
US$m    US$m       US$m     US$m                     US$m      US$m       US$m     US$m
                                                                                    
288.2   —          —        288.2   Revenue          344.0     —          —        344.0
155.2   —          —        155.2   Cost of goods    186.8     —          —        186.8
                                    sold
133.0   —          —        133.0   Gross margin     157.2     —          —        157.2
                                                                                    
                                    Operating
                                    Expenses
                                    Selling,
29.7    0.4        —        30.1    general and      25.5      —          —        25.5
                                    administrative
15.8    8.3        —        24.1    Research and     15.4      —          —        15.4
                                    development
                                    Net loss on
—       —          —        —       divestment of    —         0.5        —        0.5
                                    business
—       —          —        —       Other net        4.0       —          —        4.0
                                    charges
                                    Total
45.5    8.7        —        54.2    operating        44.9      0.5        —        45.4
                                    expenses
87.5    (8.7)      —        78.8    Operating        112.3     (0.5)      —        111.8
                                    income/(loss)
                                                                                    
—       —          —        —       Net investment   —         —          (43.2)   (43.2)
                                    gain
                                    Net loss on
—       —          7.2      7.2     equity method    —         —          —        —
                                    investments
                                    Net loss on
—       —          13.3     13.3    disposal of      —         —          —        —
                                    equity method
                                    investments
                                    Net interest
—       —          20.5     20.5    and investment   —         —          (43.2)   (43.2)
                                    gains and
                                    losses
                                    Net
87.5    (8.7)      (20.5)   58.3    income/(loss)    112.3     (0.5)      43.2     155.0
                                    before tax
                                    Provision
16.6    (1.2)      —        15.4    for/(benefit     18.9      —          —        18.9
                                    from) income
                                    taxes
70.9    (7.5)      (20.5)   42.9    Net              93.4      (0.5)      43.2     136.1
                                    income/(loss)
 
Adjusted EBITDA Reconciliation Schedule
                                                                                    
70.9    (7.5)      (20.5)   42.9    Net              93.4      (0.5)      43.2     136.1
                                    income/(loss)
                                    Net interest
—       —          20.5     20.5    and investment   —         —          (43.2)   (43.2)
                                    gains and
                                    losses
                                    Net loss on
—       —          —        —       divestment of    —         0.5        —        0.5
                                    business
                                    Provision
16.6    (1.2)      —        15.4    for/(benefit     18.9      —          —        18.9
                                    from) income
                                    taxes
                                    Depreciation
3.2     0.2        —        3.4     and              0.1       —          —        0.1
                                    amortization
1.3     3.5        —        4.8     Share-based      0.5       —          —        0.5
                                    compensation
—       —          —        —       Other net        4.0       —          —        4.0
                                    charges
92.0    (5.0)      —        87.0    Adjusted         116.9     —          —        116.9
                                    EBITDA
                                                                                    

Elan Corporation, plc
Investor Relations:
Chris Burns, +1-800-252-3526
David Marshall, +353-1-709-4444
or
Media Relations:
Emer Reynolds, +353-1-709-4022
Jonathan Birt/FTI Consulting, +44-751-559-7858
Jamie Tully/Sard Verbinnen & Co, +1-212-687-8080

Contact:

Elan Corporation, plc
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