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Élan AGM Webcast Transcript - May 26, 2005

Opening Remarks:

(Kyran McLachlan): Annual General Meeting of Élan Corporation PLC. And the time is just after 10 o’clock and we can start our proceedings. The articles of the company require that 3 or more persons being holders of at least 1/3 of the issued ordinary shares of the company are present in person or are represented by proxy before a meeting of shareholders can take place. I note that the necessary quorum of members is present and I now have the pleasure of declaring the meeting open.

The meeting will be in three parts. Firstly there’s the formal consideration of the resolutions. Secondly Kelly Martin our president and Chief Executive Officer will review our accomplishments and strategy. And lastly we will have a question and answer session for our shareholders. Following the meeting Kelly and I will be available to meet registered members of the media in the adjacent meeting room.

I have am pleased to confirm that the board of directors and senior members of the management group are present here today and shareholders will have an opportunity to meet with the directors and management directly after the meeting. I would like to offer the apologies of Dr. Garo Armen and Miss Ann Gray who have been unable to travel to today’s meeting. I would also like to take the opportunity to thank three directors who are retiring today after many years of service. Brendan Boushel is retiring after 25 years. John Groom and Dick Thornburgh are also retiring. I would also like to thank Dan Tully who has retired during the past year and we wish them all well in their retirement.

I will now turn to the business of the Annual General meeting of the company. Mr. Liam Daniel the company secretary will take the chair for this portion of the meeting and present the various items of business which we are to consider here today.

(Liam Daniel) Thank you, Chairman, I would refer those present to the notice of the AGM sent to each shareholder…

[Resolution portion of the meeting follows, the 9 items presented were all approved. There were questions about a few of these by shareholders and some discussion ensued.]
That concludes the consideration of resolutions and I turn the chair back to our chairman, Kyran McLachlan.

(Kyran McLachlan): Thank you, Liam. This is my first AGM as Chairman of the Board, and I would like to say that I am very honored to be here with you here today. I am very confident about the future of Élan and I am ready for the challenges we will face. You can be assured that we, your board, take very seriously our responsibilities to both our shareholders and to our patients. We understand and share some of the frustrations of recent months. We know what we need to do and we are very committed to achieving it.

The board of directors fully supports our excellent management team led by Kelly Martin and we are confident that the full potential of the company will be realized. In achieving its potential we have to balance both our near term and our long term goals. Kelly and I are working closely together to try and achieve this balance. We are managing our financial resources while we work through the challenges. This will allow us in the longer run to introduce our unique science and technologies to the ultimate benefit of patients. And this in turn we believe will create shareholder value for Élan.

Now I would like to ask Kelly to give you an update on the current developments of the company and this will be followed by a question and answer session for any of the shareholders.

(Kelly Martin): Thank you Mr. Chairman and good morning everybody. I would also like to recognize many members of the executive management team that are here with us today. And if questions arise that are appropriately answered by them the chairman or myself may call on them to add further clarity to specific questions.

First let me start off by articulating the various constituencies that we feel responsible to. First and foremost, as I have said over and over again patients are our most important constituency. We are in the business of and our purpose is to help patients through disease modifying research. There are hundreds of thousands of patients who suffer from these long term chronic diseases upon which Élan has dedicated many years and much time to breakthrough therapy. Shareholders, all of you, and all of the shareholders that are not with us today critically important constituency obviously you all are the people who own the company.

Nobody likes the sudden deterioration in equity value we experienced in February because of our decision to do what was right for the patients. It is our view that over time and through cycles making sure we make decisions that are in the best interests of patients will also add benefit to shareholders over time. Employees are critical, our third constituency. We have a great group of employees in the multiple locations throughout the world that Élan exists in. We provide hopefully a culture of excellence and one which each and every one of our employees feels like they can grow both personally and professionally. Fourth major constituency are the regulators that we deal with across the globe. This is a highly, highly regulated industry as it should be. It’s critically important that we work with all the regulators as closely as possible. And last but not least, another important constituency for us are our partners, Biogen, whom we work with very closely on Tysabri, and Wyeth whom we work very closely with on our Alzheimer’s work.

Following the chairman’s remarks, I’d like to briefly outline from a company perspective what we’re focused on from a short term perspective and then spend a little bit of time on what we’re focused on from a bit of a longer term perspective. We have three main areas of focus that are all short term, highly important, and of critical importance as we move forward. First is Tysabri. We have multiple things that we are focused on with Tysabri. We are very, very focused on its return to the marketplace in the US for MS patients. We are as focused on its continued regulatory advancement in Europe for both Crohn’s and Multiple Sclerosis. We are focused on its regulatory advancement in the US for Crohn’s. And in addition to those specific therapeutic areas, we are also continuing to Tysabri’s use in other autoimmune diseases such as ulcerative colitis, asthma, organ transplant, and others.

The process for the path forward to patients is as follows. There were roughly 3000 patients that were on drug at the time of the temporary pause of Tysabri. Roughly 2000 of those patients were MS patients and roughly 1000 of those patients were Crohn’s or Rheumatoid Arthritis patients. Both Biogen-Idec and ourselves have been involved with a complete review of all 3000 patients. That review takes the form of neurological reviews and exams, MRI reviews and exams, physical exam, and overall review patient by patient of both their direct doctor and at times other independent reviewers. We have been in discussions with the FDA as we go through this process. Our goal and objective would be to have a comprehensive discussion with the FDA by mid to late summer. At that time we will have all 3000 patients’ information. We’ll have the analysis. We will have a risk/benefit approach to Tysabri, its application for MS patients, and from that meeting we will have a path forward plan that will be agreed to by both Biogen, ourselves, and the FDA for the return of Tysabri in the US MS space.

In addition to Tysabri, the second major focus we have is the balance sheet and our financial condition. First and foremost as a company with a long term goal and ambition it’s imperative that we make sure we have the financial flexibility to accomplish all of our goals. We spent the past two and a half to three years reducing complexity in the company. We have reduced off-balance sheet liabilities. There are none. We had 57 joint ventures, there are now none. We have a 2008 debt maturity which we believe with our cash that is on balance sheet with our prudent and aggressive way that we’re managing the company we have no issues whatsoever or concerns whatsoever about the 2008 debt obligation. And in addition to that we feel like we have enough financial flexibility and wherewithal to continue to grow other parts of the business.

The third major short term focus is as much as it’s critical that we all focus on our Tysabri effort with the FDA in making a path back to patients, we have other things going on in the company that are critically important to its short term, intermediate, and long term success. I will name a few of them. We need to advance, continue to advance our development pipeline. I’ll specifically talk here about a Phase II Alzheimer’s program that we have that started dosing patients about six weeks ago. It is a disease-modifying program and one that we are extremely excited about in a disease area at which there are currently no disease-modifying therapies globally. Secondly we are very focused on the Prialt launch in the US. Prialt was our second innovative drug that we got approved last year in both the US and Europe. We’re working every week to add the number of doctors using the drug, add the number of patients, and build the foundation for a very successful business over time.

The third short term focus…third area is our drug technologies business. Our drug technologies business, to define that more fully for you is our nanotechnology business which is in King of Prussia, Pennsylvania, our Athlone manufacturing plant in Ireland, and our Gainesville manufacturing plant in Georgia in the US. Historically Élan had a contract manufacturing business. The drug technologies business is not a contract manufacturing business. We are now using our nanotechnology business which has got a very wide and deep patent-protected IP to work with the marketplace on changing existing drugs from a life cycle planning point of view. In the last two years we’ve doubled the net income of that business each year, and from the seat that I sit in I would say that the business prospects for that business are extremely, extremely bright over the coming years.

Last but not least in our near term focus is to continue to leverage our US hospital sales force. Our US hospital sales force has increased the amount of hospitals it covers at the same time it’s increased the relationship scores we get from all parts of the hospital. We currently have two products running through that sales force. We continually look at an opportunistic basis for other products to put through that sales force. It’s an asset we can leverage over time.

Balancing, as the Chairman said, short term versus long term we also have three main long term objectives that we’re focused on. The first I’d like to highlight is to continue to advance our pre-clinical research across the broad spectrum of research and particularly focused on the innovation and discovery side of research.

We have enormous commitment to and a lot of activity in all aspects of the Alzheimer’s work. The Phase II program that I mentioned previously is just one aspect of multiple programs currently going on in Alzheimer’s.

In addition to Alzheimer’s, but related, we have initial work going on in dementia and mild cognitive impairment, and the whole family of Alzheimer’s treatments that over time we would hope to be involved with.

In the autoimmune space, Tysabri, to remind all of you is the first generation of our research. Tysabri was a spin-off from work that was going on in Alzheimer’s. We have follow on generations in all aspects of our autoimmune research and over the next three, six, twelve, eighteen months those will become more and more visible to the marketplace.

Last but not least we have work going on in a field that is called movement disorders, Parkinson’s Disease to be specific. We have also looked at other diseases areas such as Huntington’s Disease.

The second long term topic that the chairman and I, the board, and the management team are working one falls under the category of innovative business models. Research as we all know is an expensive activity. Research is also global. Talent is global. We have an extraordinarily large amount of talent at Élan but we do not have all the talent at Élan. The management team is looking at extending its reach globally, joint-venturing collaboratively with academic institutions; joint venturing some of the activity into emerging areas with significant talent like China and India; and reaching and formalizing some external research programs across the globe with the brightest specialists we can find on specific parts of our research. You will see us continue to evolve our research model and expand it and extend it as far as possible and as flexibly as possible.

The other business to highlight from an innovative business model is the drug technologies business which I mentioned previously. To repeat, the drug technologies business is not a contract manufacturing business. The drug technologies business is a business that will allow us to build up a primary care pharmaceutical company without the infrastructure of the commercial organizations globally. So we will use our patent and technology and our manufacturing base to work with large pharmaceutical companies in the world to change their business, to change their specific molecules, take a royalty on that, and put it through our business. Paul Breen and his team have done a great job in transforming that business in its early days. There will be a lot more to come there and I think that the prospects again for that business are quite significant.

And the third broad long term area that we’re focused on is risk management. This is a risky business as we found out in February. Drug development is a risky business. New drugs are a risky business. At the same time it’s an enormously important business and it’s a very critically important business from a patient point of view. We’re working hard on making sure we can quantify those risks, understand those risks, break them down into their component parts, and over time have a risk diversification plan that brings us into more space, less volatility, and gives us wherewithal to continue on with innovative research that we have spoke about.

The drug technologies as an example does two things for us in this regard. It reduces risk, the scientific and discovery risk. At the same time it increases and will increase substantially the cash flow of the company.

Let me conclude by emphasizing three points. We are confident that upon completion of the Tysabri process, and in completion of discussions with the FDA, that there will be a path forward for Tysabri with MS patients in the US. Second point to emphasize, as outlined, we are making progress in all other areas of the company-the development pipeline, the research pipeline, the drug technologies business, Prialt in the US, and the hospital sales. It’s critically important for us to keep our eyes on those balls as equally as we are with Tysabri in order that we continue to make progress with breadth and depth from a foundation point of view.

And last but not least, we are committed to patients. We have spent many years in disease-modifying research. We will spend many more years in disease-modifying research. And our goal collectively throughout the entire company is to make the difference in many people’s lives-hundreds of thousands if not more over time, and we are bound and determined to do that. So I thank you for your time and I thank your for your attendance, and I’ll turn it back to the chair.

(Kyran McLachlan) Thank you, Kelly. So, the meeting is now open to any questions from any shareholders. There are senior members of the management here who also might facilitate answering questions if needed to do so. There is a microphone, in fact if you want to get it.

http://www.tixx.com/elan.htm

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Élan AGM Webcast Transcript - May 26, 2005 Q & A


Q & A


Q: (Unknown speaker) I’m (??) shareholder, I would like to know what are the prospects of this new drug coming back on the market or is there a future for it in the (?)

A: (Kelly Martin) The Tysabri drug…the way to assess it in our view, the best advice I can give you or any shareholder is to look at the facts...the facts. The facts are that this drug from an efficacy point of view…its ability to stop the progression of MS is so very powerful and so much more efficacious than any other drug, that that’s one set of facts that sort of stands alone that you need to understand. And the second set of facts is that the MS population, which we know of is roughly half a million patients, we presume it’s another half a million patients around the world that are either undiagnosed or untreated. The MS population continues to deteriorate, which is why it is called a degenerative disease. Current therapy only slows the degeneration down. Tysabri, for a large amount of patients actually stops the progression. So in our discussions with the FDA that we have had, and in our discussions with the FDA that we will have, those are the two pieces of critical information that we discuss. This is what the drug does, and this is what the patients need. The fact that we had two or three very specific highly unusual events with patients was something that we took very seriously, Biogen, Élan, and the FDA. And it was something we needed to know more about before we rolled it out to many, many more patients. So, it’s a long answer to your question, which is one that I appreciate. It is our view that given those two facts, what the drug does, and what the patients need, that we are very confident that there is a pathway back from where it is to the patients after we finish our process of discussing it with the FDA.

Q: (Unknown speaker) (Totally inaudible question)

A: (Kelly Martin) It’s … let me repeat… the question is… “Did we discover what the problem was initially”

A: (cont’d) (Kelly Martin) It’s a very complicated set of situations. There were three specific patients. Each of the patients was very different medically. Number one. Number two, each patient had a very different history medically. There are some common attributes to each patient. For instance they were all immune suppressed patients. It may never be possible to determine scientifically with only three patients exactly what happened. And that is not our goal, and that is not what the FDA has requested from us. What the FDA has requested from us is: “Let’s analyze the patients that we had in drug…3000 patients, and let’s work together to figure out what we can tell the medical community and the patient community from a risk and benefit point of view”. So we may never have a pure scientific argument of exactly what happened. There are multiple theses of what has happened. But I think as some of our board members and senior members of management here who are world class scientists, I think what they would say is that we don’t have enough data to ultimately prove currently what exactly happened.

Q: (Unknown speaker) (Partially inaudible question)…three thousand people still on that drug?

A: (Kelly Martin) Uh, no. When we… In February after many hours of discussion with the FDA, which were very serious, difficult questions and comments that we had. Our view, our collective view was that what we needed to do was temporarily take the drug out of the marketplace both commercially, and the trials. So as of the end of February none of those patients are on drug.

Q (Same person) So, it’s not being tested at all at the moment on patients…

A: (Kelly Martin) It is not currently in any patients. The patients who were on it have been tested thoroughly through this review process. That’s correct.

Q: (Unknown speaker) (Inaudible question)

A: (Kelly Martin) The question is: “Are we manufacturing the drug?”

Biogen is in charge of manufacturing the drug. They have been for the last several months. They will for the next few months, and then again during the summer months as we have more discussions with the FDA we and they will adjust what we need to do from a manufacturing point of view.

Q: (Unknown speaker) (Inaudible question)

A: (Kelly Martin) …Why are we manufacturing?

It is our view, uh, and Biogen’s view that Tysabri will ultimately be back in the marketplace with patients. The uptake of Tysabri for MS was extraordinary. The reason it was extraordinary is what the MS patients suffer from. It is our view, that with the efficacy of Tysabri, with the proper risk analysis, which we owe the patient community and we owe the medical community, that the demand for Tysabri in MS will be very significant…despite this pause. So what we don’t want to have is a reintroduction of the drug without the drug being available from a production side.

Q: (Unknown speaker) Mr. Martin, can you tell me if there has been, apart from the two patients which caused the temporary suspension of the testing if from the analysis of those 3,000 patients if there has been any further cases of patients who have got this disease that caused the suspension? That is the first question.

The second question is, you said that six weeks ago you started the testing of the Alzheimer’s drug. When will we be getting more information on the efficacy and the results of this testing?

A: (Kelly Martin) Thank you. I will answer the first question. I’m going to let Dr. Lars Ekman, who runs research and development answer the Alzheimer’s question. I think as long as he’s here we might as well hear from him. To be clear the patient issues we had with Tysabri were three patients, not two. The first two patients were in the MS combination trial, Avonex and Tysabri. The third patient was a patient who unfortunately had passed away about two years ago, who was in the Crohn’s trial. And we went back, on advice, our thinking, FDA thinking, we went back and looked at anything through the trials. And this particular patient, was again, as I had mentioned, before, a…the third patient was an incredibly complicated medical situation. Um… we, having started the, having announced to the market that we had these two patients, and then the third patient… The reason we announced the third patient was because the patient was in the Crohn’s trial, which we thought was different, and materially of interest to the shareholders. Since that point in time we haven’t commented on the review process. The reason we haven’t commented is we want to finish the review process. And the way we’re doing the review process at Biogen and Élan is that there’s only a few people at each company who are actually doing the reviews. So I, I actually don’t know currently what the whole review process is. Um… when it’s finished, which we anticipate by the end of June into mid-July we have all the data, then the executive teams from both companies will sit down and go through all the data, and then be prepared to talk to the…talk to the FDA. What if I have mentioned before is that three patients that we had the difficulty with or who had difficulties were all immunosuppressed patients. One of the things biologically that occurs is if you stop taking this drug your immune system will most likely rebalance unless you are taking other immunosuppressants. So many people have speculated that if you haven’t seen anything and you stop taking the drug, the chances of seeing something farther down the road go less and less and less. What we don’t want to do is comment on one patient after another because that information is really not relevant until we can tell you the shareholders and the marketplace, this is the whole bolus of patients and this is what we see. And we should be able to do that by the middle of the summer. Let me introduce Dr. Ekman who can talk to you about the Phase II Alzheimer’s program.

A: (Dr. Lars Ekman) We have two Phase II programs in Alzheimer’s Disease. We will, by the end of ’06, have a good understanding of what the drug does, to cognition, memory function, quality of life, and we will also understand if indeed we can reduce the amount of so-called beta-amyloid in the brain, which is the hallmark of the disease. Exactly when we’ll make the announcement is not defined. That will be defined together with our partner, Wyeth, and the FDA at the time. Thanks.

Q: (Unknown speaker) Thank you, Chairman. At a previous conference call, your CFO, Shane, forecast, that without Tysabri, you would be reaching break even going into 2006. I’d like to ask, “Is that still the case?”, and I’d also like to ask within that forecast, “Is Prialt achieving the revenue that he anticipated?” Thank you.

A: (Shane Cooke) We announced at our First Quarter results at the end of April that our target for the year for the business excluding any revenues or costs from Tysabri, were that we would break even on an EBIDA basis, that would be before interest costs and amortization by the end of this year. And we are still on target for that and yes we are on target with our Prialt revenues to meet that target for 2005.

Q: (Unknown speaker) May I ask in relation to the review of the 3,000 patients… It’s my understanding that they’re in about a hundred different centers. That would make somewhere about ten, maybe more per center for review. In relation to the length of time that it’s taking for the review, seems to be quite a long time for the actual analysis. And also you happened to mention that there are few people from each company involved. I would have thought that perhaps there would have been more than that in that it’s a serious issue, and the speed of getting it back on the market.

A: (Kelly Martin) The 3,000 patients let me describe…roughly 50% of those patients are in the US, and approximately are outside the US. Uh…the reviews require reading of MRIs, so in the case of MS patients, that’s very easy, goes very quickly because all the MS patients already have MRIs. In the case of Crohn’s patients and Rheumatoid Arthritis patients, they don’t necessarily have MRIs, and probably don’t have MRIs. So with the Crohn’s and Rheumatoid Arthritis patients, some of the review process actually had to start way back in what would be the more basic pieces of it first. That’s one piece of the puzzle. The second piece of the puzzle is just, uh...the logistics. You correctly point out that it is multiple sites. So the reading of MRIs, which is done locally, then done centrally-actually have to be read by the local neurologists or hospital, and then they are sent to central readers and they are categorized and then read. Then you have physical exams to follow up. Then you have new MRIs. So, there are five or six things to do times 3,000 patients in multiple locations. The MS part of it, from a review, a neurological review has obviously gone much quicker because that’s what they do. They see neurologists and a have a lot of this on file. The neurologists can do these things. If you go to a GI doctor, if you happen to have Crohn’s, the GI doctor doesn’t know how to read an MRI, so the GI doctor… We’ve had to take the GI doctors and link them up with neurologists. Um...So I would say we are going as fast as we can. We are as motivated, certainly Biogen and Élan and the FDA are as motivated to sit down with all of the data as soon as possible. Um…and uh, that’s currently what we’re doing. What we’ve said is it would take us a few months to complete the data, the data gathering, and the data analysis, and we’re completely on track to completing that as quickly as possible.

Q: (Unknown speaker) Excuse me. Can you tell me if Biogen-Idec narrowed production or are they still on full scale production? And the second one, can you tell me the position is with the European Medical Authority with the application for Tysabri? Is it derailed? In my mind it would seem to be in limbo until this, uh, trials has restarted.

A: (Kelly Martin) Uh… Thank you for the question. The, the… Biogen-Idec is not producing at full scale right now. Um… uh… We spent… Shane Cooke and Lars Ekman and Paul Breen and Allison Hulme, who is accountable for Tysabri… we spent much of the fall, through the winter, into the early part of this year working with Biogen to make sure the production capability. uh… was big enough for what we thought the demand would be. Um…one of the solutions to that is a manufacturing process called the “high titer” process. So, what Biogen has done is they are continuing to produce Tysabri with the current process that was in place in a part of their plant in North Carolina. And with another part of their plant, they’ve actually put this different process in place. So we have actually used this pause and they have used this pause to change the engineering processes around the manufacturing of Tysabri, which, when Tysabri comes back to the market, is going to be exactly what we need from a productivity point of view.

[**It sounded like someone asked specifically at this point about Oceanside]

(Kelly Martin) Oceanside is not manufacturing yet. Oceanside was going through the regulatory time line to get a final approval from the FDA so it could produce, and it’s still… still on that time line. And I’m sorry, your second question was?

Q: (Unknown speaker-same one) The application for Tysabri in Europe where is it--in limbo until tests are analyzed?

A: (Kelly Martin) I’ll… is it OK… I’ll have Dr. Ekman… What… I’ll preface his comments with, just to remind the shareholders that in the US there was accelerated approval. Europe’s process didn’t have an accelerated approval, so they were on a two-year approval. So the time frames were actually slightly different. But I’ll let Dr. Ekman comment further.

A: (Dr. Lars Ekman) For MS in Europe the European Authority permitted us to file with one year data, which was exceptional. As Kelly mentioned, there is no process, not for Tysabri or for any other drug to get accelerated approval. To some extent, that is now working to our advantage, because now the European Authority can look at the PML cases and the totality of the safety data, which is very good, and the efficacy data, and do a balanced review. We do think that the PML situation will delay the process a number of months, but it’s otherwise on speed. With regards to Crohn’s Disease, we did file last fall. That process is on track, the Europeans will obviously be updated when we finish our last trial, but that is not mandatory for the process in Europe.

Q: (Unknown speaker) (Inaudible question addressed to Dr. Ekman at this point)

A: (Dr. Lars Ekman, cont’d) The question was, “What about the reduction of amyloid?”

I said that in the Phase II study, we are applying a unique new technology to measure beta-amyloid in the brain, in humans, using PET scanning. So you can actually [inaudible question asking what that meant] …Positron Emission Tomography… to measure and quantify the amount of beta-amyloid plaque. It’s unique, it’s the first time it’s ever been done. That will give us a feeling if it is indeed possible to extract the amyloid out of the brains.

Q: (Unknown speaker) From your comments a few minutes ago about building up the production capability in the United States, that it’s continuing, seems to suggest that you are very confident that there will be a very strong demand for Tysabri, and that it’ll probably be as strong as what you’d initially planned. My question is, “Do you still see the demand for Tysabri being as confident, or as large a volume as you had anticipated back in the fall and winter of last year before Christmas?

A: (Kelly Martin) The demand for Tysabri for MS is ultimately going to be driven by what the MS patients would like and what their doctors would like. We… the MS patient population is an extraordinarily well-educated and aggressive group of patients with regard to steering therapy. We estimate that 70-75% of the therapeutic choices in MS are made, really, by the patients. Um… uh… in round numbers we had gotten approval and launched Tysabri for MS at the end of November and by the middle of February we had about 5,000 patients on the drug. In addition to that there is something in the US called a “Start Form”, and a “Start Form” needs to be filled out by patients and doctors. It really gets the reimbursement alignment to occur. Um… and we had a significant multiple of the 5,000 patients who had filled out “Start Forms”. So, what that told us was that the drug… uh…there’s a high unmet medical need, and the drug was clearly a drug of choice by those patients. What we obviously can’t predict, is given this temporary pause, what is that going to do to patient behavior? We think part of it’s going to be how the FDA, Élan and Biogen come back to the market with the drug, and say this is, these are the perceived risks or the risks around the drug in combination, perhaps with other drugs, but here’s the benefit. And, and, Mr. or Miss Patient, you need to think this through with your doctor. Um… you know, my view is that there is still an enormous unmet for MS. Um… there are roughly a hundred thousand patients who are not on any therapy at all because current therapy is either ineffective, or the side effects are too severe. So those hundred thousand patients as a start have no current choices. Um… I think the slope of the curve may be a little different. People will be more cautious. I think it would be too early to predict where the apex of that curve might get to. But from everything that we have seen and heard and talked to the neurologists, and all the correspondence from patients that we continue to get, I would say that there is still an extremely high interest in the drug, and,… and the doctors in particular want to have the option to use the drug as part of their, as part of their practice.

Q: (Unknown speaker) (Inaudible question)

A: (Kelly Martin) I’m sorry…. Where’d we get the name?

We had the name “Antegren” obviously for the longest of times, um, and uh, in this complex world of safety and regulators, one of the things that the regulators, believe it or not, have to look out for, are names that are similar, as far as drugs. And “Antegren” was close to one or two other drugs, so they forced us sort of at the last of the process, to, uh, change the name from “Antegren”, and there was a process to find the other name which was…I must admit I am not completely familiar with how we got to “Tysabri”, but it’s some derivative of a French, some French derivative of a name. I am not exactly sure where it came from. It took us several weeks to figure out how to say it.

Q: (Unknown speaker) (Inaudible question)

A: ( Kelly Martin) What’s that? Laughs.

A: (Kyran McLachlan?) It’s hard for everybody, eh?

Q: (Unknown speaker) Uh, hello. Could I ask you have you an idea how many people were using the drug before the unfortunate deaths of the three patients?

A: (Kelly Martin) There were 5,000 patients that were MS patients on the drug, and there was another 3000 patients that who were in trials for either MS or Crohn’s or Rheumatoid Arthritis. So at the time of the temporary pause there were 8,000 patients on the drug.

Q: (Unknown speaker, same person) I just wonder did Elan and the FDA overreact to the unfortunate deaths of the three people? Surely, apart from the deaths, did any research, was any research carried out to find out if the people who were on the drugs had actually improved their condition by using the drugs, and if so, was it a little bit over the top to stop using the drug altogether, agreed that three deaths are, are devastating. But if the greater good was to be got by allowing very controlled use of the drugs, if the people using them were improving in health, surely that could have been carried out without actually stopping the use of the drugs altogether.

Just one more thing, it has nothing to do with what I’ve been saying…could I suggest that perhaps 10 o’clock in the morning is a little bit early for holding an AGM and you might look at the prospect of making it possibly 11 o’clock or so in the future. However, I would like an answer to my previous question.

A: (Kelly Martin) The question on uh…the thought process about temporarily pulling the drug off the market is something that we obviously spent an enormous amount of time on at the time. Um… we are in a… for what we knew at the time, which I think is an important statement, what we knew at the time, what we knew is we had two cases, of a, by all accounts was an exceptionally rare, rare, uh, disease. As a matter of fact, when we/I first spoke to the folks at Biogen about PML, the first thing I said was, “What is PML?” Uh…uh…so I think that’s one important piece of the equation. If these adverse events were…because we had anticipated that we would have adverse events, and Dr. Ekman would talk over and over again about opportunistic infections, and if you alter the immune system you are likely to get infections. So as an example, if this had been five urinary tract infections, it would have been of a different class of issue. But the fact that we had two cases of PML I think put ourselves and Biogen and the FDA in an extremely uh… difficult position, um… in that the odds of PML being contracted by people is very, very, very rare. So to have two cases in relative short period of time, clearly indicated that there was something happening, uh, presumably something happening, that we needed to know more about. And I would say uh…secondarily we knew because we could see the demand for the drug, we knew where the drug was going to be very shortly. So as we projected out, say three more months, if we had…if we had not pulled the drug off, and we had three more months worth of marketing we may have had another twenty-five or thirty thousand patients on the drug and we still weren’t quite sure what exactly happened with these two patients. And at the end of the day, this is an industry, this is a business, and the FDA is in the business of patients’ lives, and if you are in a situation where with what you knew at the time you’re not exactly sure why this happened, um, as painful as the decision was short term, it was a decision that we thought was the most prudent we could make before the drug accelerated out from a marketing point of view. Take a pause, understand it more, get more world class scientists involved to work through it and then come back to the marketplace with more complete information. It was a very, very, um uh, difficult decision. At the end of the day it was our view that it was the right decision because at the end of the day we are accountable for uh, bringing innovative therapies to patients but bringing them in a way that they and their doctors can understand the safety aspects of things. And because these were two PML cases, uh…we collectively thought the most prudent thing to do was to take a pause. At the same time the most prudent thing to do going back is that this drug we know will help many, many patients. So as quickly as we can reintroduce this drug with the FDA is what we will do.

(Kyran McLachlan) I’d like to try and conclude the meeting because we have to start a board meeting quite soon so maybe there’s one more question and then we’ll close the meeting….

Q: (Unknown speaker) Kelly, can I just ask has Elan got any tablet in Phase III for severe depression short term for the Elan investor?

A: (Kelly Martin) I’m sorry, could you repeat….

Q: (Unknown speaker, same person) I was wondering if Elan had any tablet in Phase III that was actually for the Elan investor targeting the Elan investor for severe depression? It’s just an Irish joke…

A: (Kyran McLachlan) Thank you… We’ll take one more question… over there, one more question.

Q: (Unknown speaker) How do you explain that several senior people in Biogen were able to dispose of large quantities of shares in Élan immediately prior to the withdrawal of the drug? Was there a suggestion that they might be in possession of sensitive information and therefore be accused of insider trading?

A: (Kyran McLachlan) Well, I think as has been publicly announced, there is an SEC inquiry into the share dealings by the senior executives of Biogen and I really wouldn’t like to comment on it beyond this.

(Kyran McLachlan) Sorry, I’ll take one more question then we have to finish up. Sorry.

Q: (Unknown speaker) Thank you, a few more questions, and as a prelude, you must be the most photographed board I’ve ever… because my own eyes are bothered by the flashes, I hope all the photographs have been taken that are necessary. Three quick questions, if and when Tysabri comes back to market, I gather from general reading that the drug is going to be more expensive for people to use and to purchase than previously expected. Do you expect that this will continue to be a problem for the sale of Tysabri? Secondly, given the difficulties Élan has faced, are you satisfied that the company has enough staff in research and development to advance Tysabri and the Alzheimer’s medications, or are you largely dependent on Biogen or Wyeth for this research? And finally, very roughly, both now and for example in a three or five year time frame, what percentage of the business, Élan’s business, is Tysabri, the drug technology that you’re talking about and that you’re optimistic about, and that other section of the business. And thank you.

A: (Kelly Martin) Thank you. Um, let me, your first question was Tysabri, around the price of Tysabri. The price of Tysabri upon reintroduction won’t change. When we originally priced Tysabri, we priced it given the efficacy of the drug, and Tysabri is a drug that ultimately may be used in multiple indications. So we priced it in a way that we thought was reasonable, and rational, and would be reimbursable to the largest amount of people, uh, globally. Um, and you won’t see us change that price upon reintroduction. And all of feedback that we got from the reimbursement community in the US was very favorable. So the ability for patients to have access to the drug and have it reimbursed through their payers was very much there and is something we’re very conscious of.

Your second question was about research staff. Dr. Ekman would be delighted to have your support on more resources in research and development. Um, we have uh, we have ample resources currently in research and development for Tysabri, we have ample resources for discovery research. What I mentioned in some of my remarks is that in addition to our own resources, Dr. Ekman and the R and D teams are looking at ways to leverage resources globally that we would have associations with. Research is a time-intensive practice, it’s a people intensive practice, and uh…particularly in the last few years, particularly in the last year or two, the intersection of applied mathematics and computing power with biologists is actually beginning to speed up research. So I think that you may see us invest more in research, but it’s not necessarily with heads internally at all points. And I hope that that answers the question.

And your last question, with regard to dependence on Biogen in R and D, just to repeat, Élan invented Tysabri as a spin off from its Alzheimer’s program. And the way we work with Biogen is we split up by indication who will take the lead. They took the lead on MS, and we take it for Crohn’s and Rheumatoid Arthritis. We share resources where we can, um, uh, but there isn’t an overdependence on them to us or us to them for any of the indications. It’s a fairly, fairly well-shared process.

And last but not least, the breakdown… maybe I’d ask our CFO to go through the breakdown of the company from a broad revenue point of view, but what I’ll also say is that Tysabri currently has no revenue, and it’s all cost and investment…um, which is not insignificant. And the reason we continue to do that is because we truly believe in both the drug and its future applications. But maybe…

A: (Shane Cooke) The business today excluding Tysabri will generate revenues this year somewhere north of 500 million dollars, and the drug technology business will account for probably about one half of that. And that business is going to grow this year by about 35 per cent and we expect it to continue to grow at a double digit rate. So, if you look three to five years out, and it will depend on Tysabri, and what the demand for Tysabri is in the various scenarios, and also it will depend on how quickly we can work through our development programs on Alzheimer’s.

(Kyran McLachlan) There will be opportunities. The senior management group will be available here afterwards and if somebody wants to come up and ask questions, they will be available to talk to you. So, I’d like to conclude the meeting now. Thank you all for attending, and thank you for your support. Thank you.


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