REG-Elan Corporation PLC Elan Reports Third Quarter 2008 Financial Results

DUBLIN, Ireland--(Business Wire)--

Elan Corporation, plc today announced its third quarter 2008 financial results
and provided a business update. Commenting on Elan's business, Kelly Martin,
Elan's president and chief executive officer, said, "This quarter's results
demonstrate continued focus on execution. The brief overview presentation of the
Phase II data for bapineuzumab at the International Conference on Alzheimer's
Disease (ICAD) and the emergence of two confirmed cases of progressive
multifocal leukoencephalopathy (PML) with Tysabri have contributed to increased
volatility in our equity value and a change in the risk perception of Elan
within the marketplace. We have incorporated these events into our plans and
activities - sharing relevant medical information with regulatory agencies,
treating physicians and their patients to continue to responsibly advance our
programs. Our energies and investments have been and will continue to be
channeled to grow Tysabri and to advance our pipeline. Tangible progress will
assist in addressing the perceptions of risk and allow volatility of our equity
to reduce over time."

Commenting on Elan's third quarter financial results, Shane Cooke, Elan's
executive vice president and chief financial officer said, "We are pleased to
report a robust financial performance with revenues increasing by 53%, compared
to revenues in the third quarter of 2007, and Adjusted EBITDA losses reduced to
almost breakeven levels at $1.6 million for the quarter. This strong revenue
growth, together with an increased investment in R&D associated with the
advancement of our Alzheimer's clinical development programs, led to a decrease
of 4% in the net loss for the quarter. The increases in revenue and improvement
in related margins was driven by the continued growth of Tysabri, which
generated in-market sales of $237.0 million on a worldwide basis this quarter.
Tysabri is fast approaching blockbuster status, defined in the industry as
revenues exceeding $1 billion on an annual run-rate basis."

Mr. Cooke added, "For the remainder of the year, Elan is on track to record
revenues approaching $1 billion and Adjusted EBITDA losses of less than $50
million for the full year 2008 as we continue to invest in our strategic
portfolio of potential Alzheimer's products."

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*T
Unaudited Consolidated U.S. GAAP Income Statement Data

Three Months Nine Months
Ended Ended
September 30 September 30
2007 2008 2007 2008
U.S.$m U.S.$m U.S.$m U.S.$m
----------------------------------------------------------------------
Revenue (see page 7)
171.5 266.4 Product revenue 521.9 715.4
5.1 3.7 Contract revenue 19.2 15.0
------ ------ ------- -------
176.6 270.1 Total revenue 541.1 730.4
84.6 134.1 Cost of goods sold 240.1 366.9
------ ------ ------- -------
92.0 136.0 Gross margin (see page 12) 301.0 363.5

Operating Expenses (see page 12)
82.3 77.5 Selling, general and administrative 261.0 226.3
59.0 90.0 Research and development 180.0 244.7
14.3 7.8 Other net charges 81.4 13.4
------ ------ ------- -------
155.6 175.3 Total operating expenses 522.4 484.4
------ ------ ------- -------
(63.6) (39.3) Operating loss (221.4) (120.9)

Net Interest and Investment Gains and
Losses (see page 13)
26.8 32.9 Net interest expense 79.6 100.9
(0.2) 8.2 Net investment (gains)/losses (1.5) 11.0
-- -- Net charge on debt retirement 18.8 --
------ ------ ------- -------
Net interest and investment gains and
26.6 41.1 losses 96.9 111.9
------ ------ ------- -------

Net loss from continuing operations
(90.2) (80.4) before tax (318.3) (232.8)
Provision for/(benefit from) income
(2.8) 3.1 taxes 3.2 7.7
------ ------ ------- -------
(87.4) (83.5) Net loss (321.5) (240.5)
====== ====== ======= =======

Basic and diluted net loss per ordinary
(0.19) (0.18) share (0.69) (0.51)
Basic and diluted weighted average
number of ordinary shares outstanding
469.5 474.6 (in millions) 468.1 473.1
*T

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Unaudited Non-GAAP Financial Information - EBITDA

Three Months Non-GAAP Financial Information Nine Months
Ended Reconciliation Schedule Ended
September 30 September 30
2007 2008 2007 2008
U.S.$m U.S.$m U.S.$m U.S.$m
----------------------------------------------------------------------

(87.4) (83.5) Net loss (321.5) (240.5)
26.8 32.9 Net interest expense 79.6 100.9
Provision for/(benefit from) income
(2.8) 3.1 taxes 3.2 7.7
27.5 18.0 Depreciation and amortization 141.7 52.1
(1.2) (0.2) Amortized fees (9.6) (2.5)
------ ------ ------- -------
(37.1) (29.7) EBITDA (106.6) (82.3)
====== ====== ======= =======

Three Months Non-GAAP Financial Information Nine Months
Ended Reconciliation Schedule Ended
September 30 September 30
2007 2008 2007 2008
U.S.$m U.S.$m U.S.$m U.S.$m
----------------------------------------------------------------------
(37.1) (29.7) EBITDA (106.6) (82.3)
8.9 12.1 Share-based compensation 32.7 35.5
14.3 7.8 Other net charges 29.2 13.4
(0.2) 8.2 Net investment (gains)/losses (1.5) 11.0
-- -- Net charge on debt retirement 18.8 --
------ ------ ------- -------
(14.1) (1.6) Adjusted EBITDA (27.4) (22.4)
====== ====== ======= =======
*T

To supplement its consolidated financial statements presented on a U.S. GAAP
basis, Elan provides readers with EBITDA (Earnings Before Interest, Taxes,
Depreciation and Amortization) and Adjusted EBITDA, non-GAAP measures of
operating results. EBITDA is defined as net loss plus or minus depreciation and
amortization of costs and revenues, provisions for income tax and net interest
expense. Adjusted EBITDA is defined as EBITDA plus or minus share-based
compensation, other net charges, net investment gains or losses and net charge
on debt retirement. EBITDA and Adjusted EBITDA are not presented as, and should
not be considered alternative measures of, operating results or cash flow from
operations, as determined in accordance with U.S. GAAP. Elan's management uses
EBITDA and Adjusted EBITDA to evaluate the operating performance of Elan and its
business and these measures are among the factors considered as a basis for
Elan's planning and forecasting for future periods. Elan believes EBITDA and
Adjusted EBITDA are measures of performance used by some investors, equity
analysts and others to make informed investment decisions. EBITDA and Adjusted
EBITDA are used as analytical indicators of income generated to service debt and
to fund capital expenditures. EBITDA and Adjusted EBITDA do not give effect to
cash used for interest payments related to debt service requirements and do not
reflect funds available for investment in the business of Elan or for other
discretionary purposes. EBITDA and Adjusted EBITDA, as defined by Elan and
presented in this press release, may not be comparable to similarly titled
measures reported by other companies. Reconciliations of EBITDA and Adjusted
EBITDA to net loss from continuing operations are set out in the tables above
titled, "Non-GAAP Financial Information Reconciliation Schedule."

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Unaudited Consolidated U.S. GAAP Balance Sheet Data

December 31 September 30
2007 2008
U.S.$m U.S.$m
----------------------------------------------------------------------
Assets
Current Assets
Cash and cash equivalents 423.5 444.1
Restricted cash -- current 20.1 20.2
Investment securities -- current 276.9 54.3
Prepaid and other current assets 195.9 232.8
----------- -------------
Total current assets 916.4 751.4

Non-Current Assets
Intangible assets, net 457.6 512.9
Property, plant and equipment, net 328.9 333.1
Investment securities -- non-current 22.5 8.8
Restricted cash -- non-current 9.5 15.0
Other assets 46.5 46.0
----------- -------------
Total Assets 1,781.4 1,667.2
=========== =============

Liabilities and Shareholders' Deficit
Accounts payable, accrued and other
liabilities 251.1 289.7
Long-term debt 1,765.0 1,765.0
Shareholders' deficit(1) (see page 14) (234.7) (387.5)
----------- -------------
Total Liabilities and Shareholders' Deficit 1,781.4 1,667.2
=========== =============
*T

(1) Elan's debt covenants do not require it to maintain or adhere to any
specific financial ratios. Consequently, the shareholders' deficit has no impact
on Elan's ability to comply with its debt covenants.

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Unaudited Consolidated U.S. GAAP Cash Flow Data

Three Months Nine Months
Ended Ended
September 30 September 30
2007 2008 2007 2008
U.S.$m U.S.$m U.S.$m U.S.$m
----------------------------------------------------------------------

(1.2) 1.1 Cash flows from operating activities 12.4 (13.5)
(12.2) (11.0) Movement on debt interest and tax (110.1) (85.3)
(20.6) (8.4) Working capital movement 9.0 (41.5)
Net purchases of tangible and intangible
(5.1) (87.5) assets (18.0) (110.7)
(10.9) 19.0 Net proceeds from sale of investments (8.5) 224.2
2.0 -- Net proceeds from product divestment 4.0 2.0
6.8 13.0 Cash flows from financing activities (608.6) 51.6
-- (10.1) Restricted cash movement (6.0) (6.2)
------ ------ ------- -------
(41.2) (83.9) Net cash movement (725.8) 20.6
826.0 528.0 Beginning cash balance 1,510.6 423.5
------ ------ ------- -------
Cash and cash equivalents at end of
784.8 444.1 period 784.8 444.1
====== ====== ======= =======
*T

Summary

Total revenue increased by 53% in the third quarter of 2008 to $270.1 million,
compared to the same period in 2007. Revenue from the Biopharmaceuticals
business grew by 85% while revenue from the Elan Drug Technologies (EDT)
business increased by 3%. The increase in revenue from the Biopharmaceuticals
business was driven by a strong performance from Tysabri, with Elan's recorded
sales increasing 159% to $164.5 million in the third quarter of 2008 from $63.5
million in the third quarter of 2007. Total in-market sales of Tysabri were
$237.0 million in the third quarter 2008, an increase of 154% over the $93.3
million recorded in the same quarter of 2007.

The gross margin was $136.0 million for the third quarter of 2008, compared to
$92.0 million for the same quarter of 2007. The increased gross margin
principally reflects higher sales of Tysabri.

Although total revenue increased by 53%, selling, general and administrative
(SG&A) expenses declined by 6%, reflecting reduced sales and marketing costs and
amortization expense relating to Maxipime and Azactam, and the operating
leverage associated with Tysabri. Total research and development (R&D) expense
increased by 53% primarily related to the advancement of Elan's Alzheimer's
disease programs in the clinic.

The net loss for the third quarter of 2008 decreased by 4% to $83.5 million from
$87.4 million in the third quarter of 2007. The decrease in the net loss was
primarily due to the 53% increase in revenues and related gross margin, which
more than offset the increased investment in R&D and a higher net interest
expense. Excluding other charges and R&D expenses, Elan recorded an operating
profit of $58.5 million in the quarter, an improvement over the $9.7 million
recorded in the same quarter last year, driven by a 53% increase in revenues and
improved operating margins, compared to the third quarter of 2007.

During the quarter, Elan completed an evaluation of the strategic options for a
more formal separation of Elan's Drug Technology business. A number of parties
expressed considerable interest in participating in the future success of the
EDT business, sharing Elan's excitement for its potential, based on EDT's
current established portfolio of products, its pipeline, its unique platform of
technologies and its strong management team. However, given the recent
dislocation and uncertainty in the financial and credit markets, Elan has
decided to retain the EDT business for the foreseeable future and to put in
place structures to allow EDT to develop and grow as an independent wholly owned
subsidiary of Elan. Included in other charges is $7.3 million of deferred
transaction costs in relation to the completion of this strategic evaluation.

Adjusted EBITDA

Adjusted EBITDA losses for the third quarter of 2008 were $1.6 million, compared
to $14.1 million in the same period of 2007. The improvement principally
reflects the 53% increase in revenues and related gross margin, partially offset
by increased R&D investment. Tysabri contributed over $40 million in Adjusted
EBITDA in the third quarter of 2008, compared to Adjusted EBITDA losses of $7.1
million in the same quarter of 2007.

A reconciliation of negative Adjusted EBITDA to net loss from continuing
operations, is presented in the table titled, "Unaudited Non-GAAP Financial
Information - EBITDA," included on page 3. Included at Appendices I and II are
further analyses of the results and Adjusted EBITDA between the
Biopharmaceuticals business and the EDT business.

Total Revenue

Total revenue for the third quarter of 2008 increased 53% to $270.1 million from
$176.6 million in the same period of 2007, primarily driven by the strong growth
of Tysabri. Revenue from the Biopharmaceuticals business increased by 85% (see
page 8), while revenue from the EDT business increased by 3% (see page 11).
Revenue is analyzed below between revenue from the Biopharmaceuticals and EDT
business units.

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*T
Three Months Nine Months
Ended Ended
September 30 September 30
2007 2008 2007 2008
U.S.$m U.S.$m U.S.$m U.S.$m
----------------------------------------------------------------------
Revenue from the Biopharmaceuticals
107.4 198.9 business 323.6 518.0
69.2 71.2 Revenue from the EDT business 217.5 212.4
------ ------ ------ ------
176.6 270.1 Total revenue 541.1 730.4
====== ====== ====== ======
*T

Revenue from the Biopharmaceuticals business

For the third quarter of 2008, revenue from the Biopharmaceuticals business unit
increased by 85% to $198.9 million from $107.4 million in the third quarter of
2007. The increase was driven primarily by strong growth in Tysabri, which more
than compensated for reduced sales of Maxipime, which has been adversely
impacted by generic competition.

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Three Months Nine Months
Ended Ended
September 30 September 30
2007 2008 2007 2008
U.S.$m U.S.$m U.S.$m U.S.$m
----------------------------------------------------------------------

Product revenue
58.5 121.4 Tysabri - U.S. 141.1 307.0
5.0 43.1 Tysabri - Rest of world (ROW) -- 97.9
------ ------ ------ ------
63.5 164.5 Total Tysabri 141.1 404.9
20.7 24.2 Azactam 62.9 76.1
19.2 5.7 Maxipime 106.7 24.0
3.0 4.2 Prialt 8.2 12.1
0.4 0.3 Royalties 0.6 0.9
------ ------ ------ ------
106.8 198.9 Total product revenue 319.5 518.0

0.6 -- Contract revenue 4.1 --

------ ------ ------ ------
Total revenue from Biopharmaceuticals
107.4 198.9 business 323.6 518.0
====== ====== ====== ======
*T

Tysabri

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

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*T
Three Months Nine Months
Ended Ended
September 30 September 30
2007 2008 2007 2008
U.S.$m U.S.$m U.S.$m U.S.$m
----------------------------------------------------------------------
58.5 121.4 United States 141.1 307.0
34.8 115.6 ROW 72.7 289.7
------ ------ ------ ------
93.3 237.0 Total Tysabri in-market net sales 213.8 596.7
====== ====== ====== ======
*T

For the third quarter of 2008, Tysabri in-market net sales increased by 154% to
$237.0 million from $93.3 million in the same period of 2007, reflecting strong
patient demand across global markets. At the end of September 2008,
approximately 35,500 patients were on therapy worldwide, comprising
approximately 34,800 on commercial therapy and approximately 700 in the multiple
sclerosis (MS) clinical trials, representing an increase of 12% over the
approximately 31,800 patients who were on therapy at the end of June 2008, and
more than double the approximately 17,000 patients who were on therapy at the
end of September 2007.

During the third quarter of 2008, approximately 3,700 net new patients were
added, compared to approximately 3,000 in the third quarter of 2007, an increase
of 23%, and compared to approximately 5,700 patients who were added in the
second quarter of 2008.

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

Outside of the United States, Biogen Idec is responsible for distribution and
Elan records as revenue its share of the profit or loss on these sales of
Tysabri, plus Elan's directly-incurred expenses on these sales.

Given the continued strong growth in Tysabri sales, we expect to pay a second
milestone payment of $50.0 million to Biogen Idec in early 2009 in order to
maintain our percentage share of Tysabri at approximately 50% for annual global
in-market net sales of Tysabri that are in excess of $1.1 billion.

Tysabri - U.S.

MS

In the U.S. market, Elan recorded net sales of $121.4 million in the third
quarter of 2008, an increase of 108% over $58.5 million in the same period of
2007.

As of the end of September 2008, approximately 3,200 doctors had enrolled
patients and approximately 19,300 patients were on commercial therapy, which
represents increases of 52% and 84%, respectively, since the end of September
2007.

Crohn's Disease (CD)

On January 14, 2008, the U.S. Food and Drug Administration (FDA) approved the
supplemental Biologics License Application for Tysabri, for the treatment of
patients with CD, and Tysabri was launched in this indication at the end of the
first quarter of 2008.

At the end of September 2008, approximately 200 Crohn's disease patients were on
therapy generating $1.2 million in revenue during the third quarter of 2008.

Tysabri - ROW

As previously mentioned, in the ROW market, Biogen Idec is responsible for
distribution and Elan records as revenue its share of the profit or loss on ROW
sales of Tysabri, plus Elan's directly-incurred expenses on these sales. As a
result, in the ROW market, Elan recorded net revenue of $43.1 million for the
third quarter of 2008, compared to $5.0 million for the same period of 2007.
Elan's net Tysabri ROW revenue is calculated as follows:

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Three Months Nine Months
Ended Ended
September 30 September 30
2007 2008 2007 2008
U.S.$m U.S.$m U.S.$m U.S.$m
----------------------------------------------------------------------
34.8 115.6 ROW in-market sales by Biogen Idec 72.7 289.7
ROW operating expenses incurred by Elan
(35.3) (63.4) and Biogen Idec (95.1) (180.9)
------ ------ ------ -------
ROW operating profit/(loss) incurred by
(0.5) 52.2 Elan and Biogen Idec (22.4) 108.8
------ ------ ------ -------
Elan's 50% share of Tysabri ROW
(0.3) 26.1 collaboration operating profit/(loss) (11.2) 54.4
5.3 17.0 Elan's directly incurred costs 11.2 43.5
------ ------ ------ -------
5.0 43.1 Net Tysabri ROW revenue -- 97.9
====== ====== ====== =======
*T

As of the end of September 2008, approximately 15,300 patients, principally in
the European Union (EU), were on commercial therapy, an increase of 14% over the
approximately 13,400 who were on therapy at the end of June 2008, and an
increase of 178% over the approximately 5,500 who were on therapy at the end of
September last year.

Other Biopharmaceuticals products

Revenue from Azactam was $24.2 million in the third quarter of 2008, compared to
$20.7 million in the same period of 2007, an increase of 17%, reflecting
increased demand. Azactam lost its patent exclusivity in October 2005 and its
future sales are expected to be negatively impacted by generic competition.
However, to date no generic form of Azactam has been approved.

Revenue from Maxipime decreased 70% to $5.7 million in the third quarter of 2008
from $19.2 million in the third quarter of 2007. The decrease was principally
due to the introduction of generic competition. The first generic cefepime
hydrochloride was launched in June 2007, and additional generic forms of
Maxipime have since been launched. Elan expects that the generic competition
will continue to adversely affect Elan's revenues from, and gross margin for,
Maxipime.

Revenue from Prialt was $4.2 million in the third quarter of 2008, compared to
$3.0 million in the same period of 2007. The increase is primarily due to higher
demand for the product.

Revenue from the EDT business

Revenue from the EDT business unit increased by 3% to $71.2 million in the third
quarter of 2008 from $69.2 million in the third quarter of 2007.

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Three Months Nine Months
Ended Ended
September 30 September 30
2007 2008 2007 2008
U.S.$m U.S.$m U.S.$m U.S.$m
----------------------------------------------------------------------
Product revenue
Manufacturing revenue and royalties
15.1 16.8 Tricor(R) 42.2 45.6
10.6 10.9 Skelaxin(R) 28.1 28.3
7.5 8.5 Focalin(R) XR / RitalinLA(R) 23.0 25.7
5.2 5.6 Verelan(R) 20.5 16.8
2.6 3.2 Zanaflex 10.3 12.1
5.7 2.9 Diltiazem(R) 15.5 10.4
18.0 19.6 Other 58.3 58.5
------ ------ ------ ------
Total manufacturing revenue and
64.7 67.5 royalties 197.9 197.4

-- -- Amortized revenue - Adalat(R) 4.5 --
------ ------ ------ ------
64.7 67.5 Total product revenue 202.4 197.4

Contract revenue
1.1 0.3 Amortized fees 3.3 2.4
3.4 3.4 Research revenue and milestones 11.8 12.6
------ ------ ------ ------
4.5 3.7 Total contract revenue 15.1 15.0

------ ------ ------ ------
69.2 71.2 Total revenue from the EDT business 217.5 212.4
====== ====== ====== ======
*T

Manufacturing revenue and royalties comprise revenue earned from products
manufactured for clients and royalties earned principally on sales by clients of
products that incorporate Elan's technologies. Except as noted above, no other
product accounted for more than 10% of total manufacturing revenue and royalties
in the third quarter of 2008 or 2007. Of the total of $67.5 million (2007: $64.7
million) in manufacturing revenue and royalties, 50% (2007: 48%) consisted of
royalties received on products that were not manufactured by Elan.

Potential generic competitors have challenged the existing patent protection for
several of the products from which Elan earns manufacturing revenue and
royalties. Elan and its clients defend the parties' intellectual property rights
vigorously. However, if these challenges are successful, Elan's manufacturing
revenue and royalties will be materially and adversely affected.

Additional analyses of the results between the Biopharmaceuticals and EDT
business units are set out in Appendices I and II. In the third quarter of 2008,
EDT recorded Adjusted EBITDA of $26.9 million compared to $28.9 million in the
third quarter of 2007.

Gross Margin

The gross margin was $136.0 million for the third quarter of 2008, compared to
$92.0 million for the same quarter of 2007. The increased gross margin results
principally from higher sales of Tysabri.

The total gross margin as a percentage of revenue was 50% in the third quarter
of 2008, compared to 52% in the same period of 2007. The decrease was due
principally to the change in the mix of product sales, including the impact of
Tysabri and Maxipime as described above. The Tysabri gross margin was 44% in the
third quarter of 2008, compared to 33% in the same period of 2007, reflecting
the increased proportion of ROW revenues compared to the prior period. The gross
margin is impacted by the profit sharing and operational arrangements in place
with Biogen Idec. Elan's gross margin on sales of Tysabri in the United States
was approximately 38% in the third quarter of 2008, compared to 36% in the same
period of 2007.

Operating Expenses

Selling, general and administrative

For the third quarter of 2008, SG&A expenses decreased 6% to $77.5 million from
$82.3 million in the same period of 2007, principally reflecting reduced sales
and marketing costs and amortization expense relating to Maxipime and Azactam,
and the operating leverage associated with Tysabri, and can be analyzed as
follows:

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*T
Three Months Nine Months
Ended Ended
September 30 September 30
2007 2008 2007 2008
U.S.$m U.S.$m U.S.$m U.S.$m
----------------------------------------------------------------------
51.4 54.8 Biopharmaceuticals 164.4 160.6
11.7 10.2 EDT 29.5 32.0
14.5 6.1 Depreciation and amortization 49.7 14.4
4.7 6.4 Share-based compensation 17.4 19.3
------ ------ ------ ------
82.3 77.5 Total 261.0 226.3
====== ====== ====== ======
*T

The SG&A expenses related to the Tysabri ROW sales are reflected in the Tysabri
ROW revenue as previously described on page 10.

Research and development

For the third quarter of 2008, R&D expenses increased 53% to $90.0 million from
$59.0 million in the same period of 2007. The increase was primarily due to
increased expenses associated with the progression of Elan's Alzheimer's disease
programs, including the advance of bapineuzumab into Phase 3 clinical trials and
the advance of ELND-005 into Phase 2 clinical trials during the second half of
2007.

Other charges

For the third quarter of 2008, other net charges of $7.8 million were primarily
related to the write-off of $7.3 million of deferred transaction costs related
to the evaluation of the strategic options associated with the potential
separation of EDT. The total other net charges of $14.3 million in the third
quarter of 2007 consisted of severance and restructuring charges that arose
principally from the consolidation of Elan's U.S. west coast locations, which
resulted in the closure of the San Diego facility and the expansion of Elan's
operations in South San Francisco.

Net interest and investment gains and losses

For the third quarter of 2008, net interest and investment gains and losses
increased to $41.1 million from the $26.6 million recorded for the third quarter
of 2007. This increase was primarily due to investment impairment charges and an
increase in net interest expense. Investment impairment charges for the third
quarter of 2008 were $7.8 million, compared to $0.5 million in the third quarter
of 2007, primarily as a result of an impairment related to an investment in
auction rate securities. Net interest expense for the third quarter of 2008 was
$32.9 million, compared to $26.8 million in the third quarter of 2007,
principally reflecting decreased interest income as a result of lower cash
balances and reduced interest rates.

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*T
Movement in Shareholders' Deficit

U.S.$m
-------------------------------------------------------------
Balance at June 30, 2008 (328.3)
Net loss for the period (83.5)
Share-based compensation 12.4
Issuance of share capital 12.2
Other (0.3)
---------------
Balance at September 30, 2008 (387.5)
===============
*T

Elan's debt covenants do not require it to maintain or adhere to any specific
financial ratios. Consequently, the shareholders' deficit has no impact on
Elan's ability to comply with its debt covenants.

Research and Development Update

During the course of 2008, Elan's goal is to continue its progress throughout
its R&D programs, including Alzheimer's disease, Parkinson's disease, MS and
other neurodegenerative areas.

Alzheimer's disease and other neurodegenerative diseases

Elan is focused on further enhancing its breakthrough basic and clinical
research in Alzheimer's disease, as well as other neurodegenerative diseases
including MS and Parkinson's disease. With bapineuzumab (AAB-001, a monoclonal
antibody targeted against beta amyloid peptide), Elan and Wyeth continue to lead
the field in immunotherapy for Alzheimer's disease, conducting worldwide four
Phase 3 clinical studies in patients with mild to moderate Alzheimer's disease.
With respect to ELND-005, an orally-administered therapeutic agent under active
investigation by Elan and Transition Therapeutics, Inc. for Alzheimer's disease,
we have recently achieved the patient enrollment target of a Phase 2 clinical
study in North America. Finally in Alzheimer's disease, the development program
for ELND-006, a small molecule gamma secretase inhibitor, has commenced with
dosing in a Phase 1 clinical study.

ELND-002, a small molecule targeting alpha-4 integrins, is in Phase 1 testing
with plans for additional early stage clinical testing in patients early next
year.

In addition, Elan and Biogen Idec have initiated a Phase 1/2 clinical trial of
Tysabri in oncology in patients with relapsed or refractory multiple myeloma.

In the post marketing setting, as previously reported by Elan and Biogen Idec on
July 31, 2008, two additional cases of progressive multifocal
leukoencephalopathy (PML) have occurred in Tysabri-treated MS patients who were
not receiving concomitant immunomodulatory therapy. Elan and Biogen Idec, in
conjunction with the FDA and the European Medicines Agency, have updated the
full prescribing information for Tysabri to reflect this development.

About Elan

Elan Corporation, plc (NYSE: ELN) is a neuroscience-based biotechnology company
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. Elan shares trade on the
New York, London and Dublin Stock Exchanges. For additional information about
the company, please visit http://www.elan.com.

Forward-Looking Statements

This document contains forward-looking statements about Elan's financial
condition, results of operations, business prospects and products in research
and 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: the potential of Tysabri, the incidence of
serious adverse events associated with Tysabri (including any additional cases
of PML), and the potential for the successful development and commercialization
of additional products;, the potential of Elan's other marketed products; 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 research and development activities including, in particular, whether
the Phase 3 clinical trials for bapineuzumab are successful and the speed with
which regulatory authorizations and product launches may be achieved;
competitive developments affecting Elan's products (including, in particular,
when Azactam will face generic competition); the ability to successfully market
both new and existing products; difficulties or delays in manufacturing and
supply of Elan's products; trade buying patterns; the impact of generic and
branded competition, whether restrictive covenants in Elan's debt obligations
will adversely affect Elan; the trend towards managed care and health care cost
containment, including Medicare and Medicaid; the potential impact of the
Medicare Prescription Drug, Improvement and Modernization Act 2003; possible
legislation affecting pharmaceutical pricing and reimbursement, both
domestically and internationally; failure to comply with kickback and false
claims laws including in respect to past practices related to the marketing of
Zonegran(R) which are being investigated by the U.S. Department of Justice and
the U.S. Department of Health and Human Services (the resolution of this
Zonegran matter could require Elan to pay substantial fines and to take other
actions that could have a material adverse effect on Elan); failure to comply
with Elan's payment obligations under Medicaid and other governmental programs;
exposure to product liability 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 products or product candidates;
interest rate and foreign currency exchange rate fluctuations; governmental laws
and regulations affecting domestic and foreign operations, including tax
obligations; general changes in United States and International generally
accepted accounting principles; growth in costs and expenses; changes in product
mix; 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, 2007, and in its Reports of
Foreign Issuer on Form 6-K filed with the U.S. Securities and Exchange
Commission. Elan assumes no obligation to update any forward-looking statements,
whether as a result of new information, future events or otherwise.

Appendix I

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*T
Three Months Ended Three Months Ended
September 30, 2007 September 30, 2008
Biopharma- Biopharma-
ceuticals EDT Total ceuticals EDT Total
U.S.$m U.S.$m U.S.$m U.S.$m U.S.$m U.S.$m
----------------------------------------------------------------------
Revenue
106.8 64.7 171.5 Product revenue 198.9 67.5 266.4
0.6 4.5 5.1 Contract revenue -- 3.7 3.7
---------- -------- ------ ---------- ------ ------
107.4 69.2 176.6 Total revenue 198.9 71.2 270.1
57.0 27.6 84.6 Cost of goods sold 102.5 31.6 134.1
---------- -------- ------ ---------- ------ ------
50.4 41.6 92.0 Gross margin 96.4 39.6 136.0

Operating Expenses
Selling, general
and
70.3 12.0 82.3 administrative(1) 65.5 12.0 77.5
Research and
47.7 11.3 59.0 development 78.1 11.9 90.0
14.1 0.2 14.3 Other net charges 7.8 -- 7.8
---------- -------- ------ ---------- ------ ------
Total operating
132.1 23.5 155.6 expenses 151.4 23.9 175.3
---------- -------- ------ ---------- ------ ------
Operating
(81.7) 18.1 (63.6) (loss)/income (55.0) 15.7 (39.3)

Depreciation and
18.2 9.3 27.5 amortization 9.2 8.8 18.0
(0.2) (1.0) (1.2) Amortized fees -- (0.2) (0.2)
Share-based
6.6 2.3 8.9 compensation 9.5 2.6 12.1
14.1 0.2 14.3 Other net charges 7.8 -- 7.8
---------- -------- ------ ---------- ------ ------
(43.0) 28.9 (14.1) Adjusted EBITDA (28.5) 26.9 (1.6)
========== ======== ====== ========== ====== ======
*T

(1) General and corporate costs have been allocated between the two segments.

Appendix II

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*T
Nine Months Ended Nine Months Ended
September 30, 2007 September 30, 2008
Biopharma- Biopharma-
ceuticals EDT Total ceuticals EDT Total
U.S.$m U.S.$m U.S.$m U.S.$m U.S.$m U.S.$m
----------------------------------------------------------------------
Revenue
319.5 202.4 521.9 Product revenue 518.0 197.4 715.4
4.1 15.1 19.2 Contract revenue -- 15.0 15.0
---------- ------ ------- ---------- ------ -------
323.6 217.5 541.1 Total revenue 518.0 212.4 730.4
152.5 87.6 240.1 Cost of goods sold 271.6 95.3 366.9
---------- ------ ------- ---------- ------ -------
171.1 129.9 301.0 Gross margin 246.4 117.1 363.5

Operating Expenses
Selling, general
and
229.0 32.0 261.0 administrative(1) 190.1 36.2 226.3
Research and
145.7 34.3 180.0 development 209.3 35.4 244.7
77.9 3.5 81.4 Other net charges 13.4 -- 13.4
---------- ------ ------- ---------- ------ -------
Total operating
452.6 69.8 522.4 expenses 412.8 71.6 484.4
---------- ------ ------- ---------- ------ -------
Operating
(281.5) 60.1 (221.4) (loss)/income (166.4) 45.5 (120.9)

Depreciation and
114.7 27.0 141.7 amortization 24.0 28.1 52.1
(1.7) (7.9) (9.6) Amortized fees -- (2.5) (2.5)
Share-based
25.8 6.9 32.7 compensation 27.9 7.6 35.5
25.7 3.5 29.2 Other net charges 13.4 -- 13.4
---------- ------ ------- ---------- ------ -------
(117.0) 89.6 (27.4) Adjusted EBITDA (101.1) 78.7 (22.4)
========== ====== ======= ========== ====== =======
*T

(1) General and corporate costs have been allocated between the two segments.

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Elan Corporation
Investor Relations:
Chris Burns, 800-252-3526
David Marshall, 353-1-709-4444
or
Media Relations:
Jonathan Birt, 212-850-5664 or 44-20-7269-7205
Niamh Lyons, 353-1-663-3602
*T

Elan Corporation PLC

Copyright Business Wire 2008