Elan AGM Webcast Transcript 2005
Posted: Tue May 31, 2005 5:54 am
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
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