Elan CEO says favors big pharma tie-up

DUBLIN (Reuters) - Irish drugmaker Elan said it was seeking a partnership with a big pharmaceutical company, after reporting a 14 percent rise in first-quarter revenues and a wider net loss earlier on Wednesday.

The comments come before the release of a strategic review of Elan's business by Citigroup, which was hired in January to look at options including a possible sale or merger.

Elan declined to say on Wednesday when the Citigroup review would be completed, but in February, Elan said the bank would report back to its board with recommendations in around 10 weeks.

"Given our pipeline and size of potential coverage, the best option for Elan would be to have a partnership with a large pharmaceutical company that would allow us access to existing global infrastructure," Chief Executive Kelly Martin told a conference call.

Shares in the group rose 4 percent in afternoon trade after it said it remained on track to record double-digit revenue growth this year and to generate full-year adjusted core profit.

"I'm surprised the stock hasn't been hit harder but it's at a bit of an end-game, just lingering here, doing nothing," one Dublin-based trader said."

"On the back of what we thought were fairly disappointing results, the share price moved ahead but it doesn't take much to push it one way or the other in the Dublin market."

The stock has lost nearly three-quarters of its value in the past 12 months as a result of concerns over the safety of its multiple sclerosis drug, Tysabri, disappointing results from a trial of its experimental Alzheimer's vaccine and uncertainty over its future.

Major shareholders have criticized the direction of the biotechnology group -- which has $1.1 billion in debt due in 2011 -- and questioned the experience of its board.

Martin said he believed the directors had a good balance between industry and non-industry experience.

LOSS WIDENS

Elan recorded a loss per share of 22 U.S. cents in the three months to the end of March, versus a loss of 18 cents a year earlier, as restructuring charges and research & development costs hit the bottom line.

Four analysts polled by Reuters expected an average loss before exceptional items of 28 cents.

Total quarterly revenue rose by 14 percent to $245 million, driven by sales of Tysabri. That compared with analysts' estimates of $252 million.

The group's net loss increased to $102.6 million, compared with $85.5 million in the same period last year.

The company, which said in February it would cut 230 jobs in the United States and Ireland, tried last year to sell its profit-generating drug delivery business, but was unable to complete a transaction amid collapsing credit markets.

Revenues from the drug delivery business fell by 14 percent in the first quarter.

Elan also said around 40,000 patients were on Tysabri therapy worldwide by the end of March -- a figure its U.S. marketing partner Biogen Idec released last week.

Biogen scaled back its original view that 100,000 patients would be on the drug by the end of 2010. It also reported a sixth case of the potentially deadly brain infection progressive multifocal leukoencephalopathy, or PML, last week.

Elan added that enrolment for ApoE4 non-carrier trials of bapineuzumab -- its Alzheimer's vaccine -- was ongoing. The process was expected to be completed by the end of the year.

Elan and U.S. partner Wyeth stopped testing the highest dose of bapineuzumab, due to safety concerns, earlier this month.

(Editing by Carmel Crimmins and Simon Jessop)