DUBLIN–(Business Wire)–
Elan Corporation, plc today reported its second quarter and first half 2010
financial results.

Elan CEO Kelly Martin commented, “Our second quarter results demonstrate
continued progress across our major areas of focus. Tysabri growth increased in
terms of net patient additions; our BioNeurology pipeline advanced, including
completion of the ELND005 Phase 2 trial and full enrollment of the STRATIFY 1
trial studying the JC virus assay; we also saw recently launched EDT licensed
products continue to grow in terms of revenue and market share for our
licensees.”

Commenting on the results, Elan executive vice president and chief financial
officer, Shane Cooke said that the Company was very pleased with the operating
performance in the first half of the year. Revenues grew by 10% which, coupled
with a decrease of 14% in operating expenses, resulted in a six-fold increase in
Adjusted EBITDA to $82.4 million. Revenue growth continued to be driven by a 22%
increase in revenues from Tysabri as well as the launch of Ampyra earlier in the
year. Adjusted EBITDA for the second quarter was impacted by reduced revenues
from a number of older legacy products, but this was more than offset by the
growth in Tysabri and a 14% reduction in operating expenses. Mr. Cooke confirmed
that for the full-year 2010, Elan remains on target to record revenue growth,
Adjusted EBITDA of more than $150 million and operating profits before other
charges or gains. He noted also that the Company generated almost $50 million in
cash from operations in the first half of the year, including $23.7 million
generated in the second quarter, and was on track to be cash flow positive
before other charges for the full-year. Mr. Cooke added that the $215.1 million
net loss for the first half of the year included a $206.3 million settlement
reserve charge in relation to the previously announced agreement in principle
with the U.S. Attorney`s Office in relation to Zonegran.

Unaudited Consolidated U.S. GAAP Income Statement Data

Three Months Ended June 30 Six Months Ended June 30
2009 2010 2009 2010
US$m US$m US$m US$m
Revenue (see page 9)
270.6 264.5 Product revenue 513.5 570.3
10.3 4.4 Contract revenue 12.5 9.1
280.9 268.9 Total revenue 526.0 579.4
139.4 141.6 Cost of goods sold 268.2 287.1
141.5 127.3 Gross margin 257.8 292.3

Operating Expenses (see page 14)
69.1 63.8 Selling, general and administrative 140.1 127.8
80.9 65.5 Research and development 161.4 130.3
– 206.3 Settlement reserve charge (see page 16) – 206.3
8.0 1.6 Other net charges (see page 16) 27.6 5.1
158.0 337.2 Total operating expenses 329.1 469.5
(16.5 ) (209.9 ) Operating loss (71.3 ) (177.2 )

Net Interest and Investment Gains and Losses
35.8 26.4 Net interest expense 69.6 54.6
– (8.4 ) Net investment gains – (13.9 )
35.8 18.0 Net interest and investment gains 69.6 40.7

(52.3 ) (227.9 ) Net loss before tax (140.9 ) (217.9 )
15.9 (14.8 ) Provision for/(benefit from) income taxes 29.9 (2.8 )
(68.2 ) (213.1 ) Net loss (170.8 ) (215.1 )

(0.14 ) (0.36 ) Basic and diluted net loss per ordinary share (0.36 ) (0.37 )
475.9 584.8 Basic and diluted weighted average number of ordinary shares outstanding (in millions) 475.7 584.6

Unaudited Non-GAAP Financial Information – EBITDA

Three Months Ended Non-GAAP Financial Information Six Months Ended
June 30 Reconciliation Schedule June 30
2009 2010 2009 2010
US$m US$m US$m US$m

(68.2 ) (213.1 ) Net loss (170.8 ) (215.1 )
35.8 26.4 Net interest expense 69.6 54.6
15.9 (14.8 ) Provision for/(benefit from) income taxes 29.9 (2.8 )
19.1 15.7 Depreciation and amortization 38.2 31.5
(0.3 ) (0.3 ) Amortized fees (0.4 ) (0.4 )
2.3 (186.1 ) EBITDA (33.5 ) (132.2 )

Three Months Ended Non-GAAP Financial Information Six Months Ended
June 30 Reconciliation Schedule June 30
2009 2010 2009 2010
US$m US$m US$m US$m
2.3 (186.1 ) EBITDA (33.5 ) (132.2 )
8.8 7.6 Share-based compensation 19.0 17.1
– 206.3 Settlement reserve charge – 206.3
8.0 1.6 Other net charges 27.6 5.1
– (8.4 ) Net investment gains – (13.9 )
19.1 21.0 Adjusted EBITDA 13.1 82.4

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, tax benefit and
net interest expense. Adjusted EBITDA is defined as EBITDA plus or minus
share-based compensation, settlement reserve charge, other net charges, and net
investment gains. EBITDA and Adjusted EBITDA are not presented as, and should
not be considered alternative measures of, operating results or cash flows 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.”

Unaudited Consolidated U.S. GAAP Balance Sheet Data

December 31 June 30

2009
2010

US$m
US$m
Assets
Current Assets
Cash and cash equivalents 836.5(1) 883.2 (1)(2)
Restricted cash and cash equivalents – current 16.8 13.6
Investment securities – current 7.1 2.6
Deferred tax assets – current 23.9 32.5
Other current assets 274.9 239.0
Total current assets 1,159.2 1,170.9

Non-Current Assets
Intangible assets, net 417.4 389.7
Property, plant and equipment, net 292.8 297.9
Equity method investment 235.0 235.0
Investment securities – non-current 8.7 9.1
Deferred tax assets – non-current 174.8 166.7
Restricted cash and cash equivalents – non-current 14.9 14.9
Other assets 42.9 50.6
Total Assets 2,345.7 2,334.8

Liabilities and Shareholders` Equity
Accounts payable, accrued and other liabilities 311.5 304.4
Settlement reserve – 206.3
Long-term debt 1,540.0 1,540.0
Shareholders` equity (see page 17) 494.2 284.1
Total Liabilities and Shareholders` Equity 2,345.7 2,334.8

(1) Under the terms of our debt covenants, we are required to either reinvest $235.0 million of the proceeds received from the September 17, 2009 transaction with Johnson & Johnson within twelve months of that date, or if not reinvested, make a pro-rata offer to repurchase a portion of our debt at par. As of June 30, 2010, $192.0 million of the $235.0 million proceeds has not been reinvested.

(2) As of July 16, 2010, $203.5 million of cash has been placed in an escrow account in relation to the Zonegran settlement.

Unaudited Consolidated U.S. GAAP Cash Flow Data
Three Months Ended Six Months Ended
June 30 June 30
2009 2010 2009 2010
US$m US$m US$m US$m

19.1 21.0 Adjusted EBITDA 13.1 82.4
(39.0 ) (17.6 ) Net interest and tax (75.6 ) (52.2 )
– (206.3 ) Settlement reserve charge – (206.3 )
(8.0 ) (3.3 ) Other net charges (9.7 ) (5.3 )
(45.1 ) 229.9 Working capital decrease/(increase) (27.1 ) 227.5
(73.0 ) 23.7 Cash flows from operating activities (99.3 ) 46.1

(7.9 ) (14.9 ) Net purchases of tangible and intangible assets (76.7 ) (23.8 )
2.7 9.3 Net proceeds from sale of investments 10.3 16.0
3.0 (5.8 ) Cash flows from financing activities 5.2 0.5
– 4.7 Net proceeds on disposal of Prialt business – 4.7
3.4 3.2 Restricted cash and cash equivalents movement 3.6 3.2
(71.8 ) 20.2 Net cash movement (156.9 ) 46.7
290.2 863.0 Beginning cash balance 375.3 836.5
218.4 883.2 Cash and cash equivalents at end of period 218.4 883.2

Overview

Operating Results

First Half of 2010

Total revenue for the first half of 2010 increased by 10% to $579.4 million from
$526.0 million for the same period in 2009. The increase in revenue was driven
by the growth of Tysabri®, which more than offsets the expected decline in
revenues from Azactam®. Elan ceased distributing Azactam as of March 31, 2010
and will not earn any future revenues from this product. Elan`s recorded sales
of Tysabri increased 22% to $406.2 million for the first half of 2010 from
$332.4 million for the first half of 2009. This increase in revenues is
consistent with the 22% growth in global in-market net sales of Tysabri to
$589.4 million in the first half of 2010 from $481.3 million in the first half
of 2009 and the 22% increase in patients on therapy worldwide to approximately
52,700 patients at the end of June 2010 from approximately 43,300 at the end of
June 2009.

For the first half of 2010, Adjusted EBITDA increased six-fold to $82.4 million
from $13.1 million for the same period in 2009. The increase principally
reflects the 10% increase in revenue, improved operating margins and a 14%
reduction in combined selling, general and administrative (SG&A) and research
and development (R&D) expenses.

In assessing the first half performance, it is important to note that these
results were achieved against a background where we have, as expected, seen
reduced revenues from a number of products including Azactam and Prialt® in the
BioNeurology business and Skelaxin® and Tricor® in the Elan Drug Technologies
(EDT) business, as well as an increased investment in development activities
related particularly to Tysabri, ELND005 and the EDT business. The loss of
contribution from this decrease in revenue and the increased investment in our
growth drivers was more than compensated for by the continued growth of Tysabri,
the launch of AmpyraTM, reduced SG&A costs and the transfer of the Alzheimer`s
Immunotherapy Program (AIP) to Janssen Alzheimer Immunotherapy (Janssen AI).
This transition was particularly pronounced in the second quarter of 2010 with
revenues from these products $34.1 million lower than the same period last year.
Despite the loss of approximately $25 million in Adjusted EBITDA associated with
these revenues, and with very little revenue included this quarter related to
Ampyra, we reported 4% lower total revenues and increased Adjusted EBITDA in the
second quarter of 2010 due to increased revenue from Tysabri and good cost
control.

Cash flows generated from operating activities were $46.1 million in the first
half of 2010, compared to cash used by operating activities of $99.3 million in
the first half of 2009. This improvement was due to the improved operating
performance and a reduction in working capital requirements.

The net loss of $215.1 million for the first half of 2010 includes a settlement
reserve charge of $206.3 million in respect of an agreement in principle reached
with the U.S. Attorney`s Office for the District of Massachusetts with respect
to the previously disclosed U.S. Department of Justice`s investigation of sales
and marketing practices for Zonegran® (zonisamide), which Elan divested in 2004.

For the first half of 2010, net loss before tax, excluding the settlement
reserve charge and other net charges was $6.5 million, compared to a net loss
before tax and excluding other net charges of $113.3 million for the same period
of 2009. This improvement was due to the improved operating performance, lower
net interest expense, and net investment gains in the first half of 2010.

Quarter 2, 2010

Total revenue for the second quarter of 2010 decreased by 4% to $268.9 million
from $280.9 million for the same period in 2009. Revenue from the BioNeurology
business grew by 5% while revenue from the EDT business decreased by 29%. The
increase in revenues from the BioNeurology business was driven by Tysabri, which
more than offset the expected reduced revenues from Azactam and Prialt. Elan`s
recorded sales of Tysabri increased 19% to $207.4 million for the second quarter
of 2010, from $173.7 million for the second quarter of 2009, consistent with the
17% growth in global in-market net sales of Tysabri to $297.5 million in the
second quarter of 2010 from $253.8 million in the second quarter of 2009. The
solid patient demand for Tysabri is also reflected in the growth of net patient
additions with 2,400 added during the second quarter of 2010, compared to 1,900
added during the first quarter of 2010.

As expected, revenue from the EDT business declined by 4% in the first half of
2010 due principally to lower revenues from Tricor and Skelaxin, which were
offset by revenues associated with the launch of Ampyra. The decrease in the
second quarter of 2010 as compared to the second quarter of 2009 was more
pronounced than the half-year decrease primarily due to the timing of Ampyra
revenues, which are recorded based on when the product is shipped to Acorda
Therapeutics, Inc. (Acorda). Consequently, of the $20.8 million in revenues from
Ampyra that were recorded in the first half of 2010, only $1.9 million were
recorded in the second quarter due to the timing of shipments.

For the second quarter of 2010, the gross margin decreased 10% to $127.3 million
from $141.5 million for the second quarter of 2009, reflecting the revenue
decrease and changes in product mix described above.

Operating loss before the settlement reserve charge and other net charges for
the second quarter of 2010 was $2.0 million, compared to an operating loss
before other net charges of $8.5 million for the same period of 2009. This
improved operating performance was driven by a 14% decrease in combined SG&A and
R&D expenses compared to the second quarter of 2009, offset by reduced revenues
as described above. SG&A expenses declined by 8% compared to the same period in
2009, while R&D costs decreased by 19%. The decrease in R&D costs is primarily
due to the cost savings as a result of the divestment of the AIP to a subsidiary
of Johnson & Johnson (Janssen AI) in September 2009. Under the terms of the
September 2009 transaction with Johnson & Johnson, Elan received a 49.9%
ownership interest in Janssen AI. R&D costs in the second quarter of 2009
included $29.1 million in relation to AIP.

The BioNeurology business recorded an operating loss, before the settlement
reserve charge and other net charges, of $5.0 million in the second quarter of
2010. This represents a $31.6 million improvement over the $36.6 million
operating loss before other net charges recorded by the BioNeurology business in
the second quarter of 2009, and reflects the continued growth in Tysabri
revenues offsetting the expected reduced revenues from Azactam and Prialt, in
addition to an 18% reduction in combined SG&A and R&D expenses. In the EDT
business, the operating income before other net charges decreased to $3.0
million in the second quarter of 2010 compared to $28.1 million in the same
period in 2009, due principally to the decrease in revenues from Tricor and
Skelaxin.

For the second quarter of 2010, net loss before tax, excluding the settlement
reserve charge and other net charges was $20.0 million, compared to a net loss
before tax and excluding other net charges of $44.3 million for the same period
of 2009. This improvement was primarily due to the decrease in combined SG&A and
R&D expenses, lower net interest expense, and net investment gains in the second
quarter of 2010, offset by reduced revenues as described above.

For the second quarter of 2010, Elan reported Adjusted EBITDA of $21.0 million,
compared to Adjusted EBITDA of $19.1 million in the same period of 2009. The
improvement principally reflects improved operating margins and an 18% reduction
in operating expenses in the BioNeurology business, offset by the decrease in
revenues from the EDT business.

A reconciliation of Adjusted EBITDA to net loss, 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 BioNeurology and EDT businesses.

Exploration of EDT separation

Elan continues to explore the possibility of a separation of its EDT business.
The Company’s review includes a detailed assessment of the possible separation,
including timing, market conditions and the impact on all of its key
constituencies. The Company expects to make a decision whether to proceed over
the next several months. No specific timetable has been set for completion of
the review and there can be no assurances that such a transaction will take
place.

Total Revenue

For the first half of 2010, total revenue increased by 10% to $579.4 million
from $526.0 million for the same period of 2009. Revenue from the BioNeurology
business increased by 15% while revenue from the EDT business decreased by 4%
for the half-year. For the second quarter of 2010, total revenue decreased by 4%
to $268.9 million from $280.9 million for the same period of 2009. Revenue from
the BioNeurology business increased by 5% while revenue from the EDT business
decreased by 29% for the quarter. Revenue is analyzed below between revenue from
the BioNeurology and EDT business units.

Three Months Ended Six Months Ended
June 30 June 30
2009 2010 2009 2010
US$m US$m US$m US$m
202.0 212.9 Revenue from the BioNeurology business 387.4 447.0
78.9 56.0 Revenue from the EDT business 138.6 132.4
280.9 268.9 Total revenue 526.0 579.4

Revenue from the BioNeurology business

For the second quarter of 2010, revenue from the BioNeurology business increased
by 5% to $212.9 million from $202.0 million for the second quarter of 2009. The
increase was primarily driven by the growth in Tysabri sales, more than
offsetting the expected lower revenues from other BioNeurology products.

Three Months Ended Six Months Ended
June 30 June 30
2009 2010 2009 2010
US$m US$m US$m US$m
Product revenue
124.4 144.9 Tysabri – U.S. 240.4 280.1
49.3 62.5 Tysabri – Rest of world (ROW) 92.0 126.1
173.7 207.4 Total Tysabri 332.4 406.2
20.5 1.9 Azactam 37.7 27.4
4.6 1.6 Prialt 8.7 6.2
2.6 1.6 Maxipime® 7.6 5.4
0.6 0.4 Royalties 1.0 0.8
202.0 212.9 Total product revenue from BioNeurology business 387.4 446.0
– – Contract revenue – 1.0
202.0 212.9 Total revenue from BioNeurology business 387.4 447.0

Tysabri

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

Three Months Ended Six Months Ended
June 30 June 30
2009 2010 2009 2010
US$m US$m US$m US$m
124.4 144.9 United States 240.4 280.1
129.4 152.6 ROW 240.9 309.3
253.8 297.5 Total Tysabri in-market net sales 481.3 589.4

For the second quarter of 2010, Tysabri in-market net sales increased by 17% to
$297.5 million from $253.8 million for the same period of 2009. The increase
reflects solid patient demand across global markets. At the end of June 2010,
approximately 52,700 patients were on therapy worldwide, including approximately
26,200 commercial patients in the United States and approximately 26,000
commercial patients in the ROW, representing a 22% increase over the
approximately 43,300 patients who were on the therapy at the end of June 2009.
The second quarter of 2010 saw an increase in net patient additions to 2,400 for
this quarter, compared to 1,900 in the first quarter of 2010.

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.

Tysabri – U.S.

In the U.S. market, Elan recorded net sales of $144.9 million for the second
quarter of 2010, an increase of 16% over net sales of $124.4 million in the same
period of 2009. Almost all of these sales are for the multiple sclerosis (MS)
indication.

At the end of June 2010, approximately 26,200 patients were on commercial
therapy, which represents an increase of 4% over the approximately 25,200 who
were on therapy at the end of March 2010 and 19% over the approximately 22,000
patients who were on therapy at the end of June last year.

Tysabri – ROW

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 $62.5 million for the second quarter of 2010, compared
to $49.3 million for the second quarter of 2009, an increase of 27%. Elan`s net
Tysabri ROW revenue is calculated as follows:

Three Months Ended Six Months Ended
June 30 June 30
2009 2010 2009 2010
US$m US$m US$m US$m
129.4 152.6 ROW in-market sales by Biogen Idec 240.9 309.3
(69.7) (70.3) ROW operating expenses incurred by the collaboration (128.6) (144.4)
59.7 82.3 ROW operating profit incurred by the collaboration 112.3 164.9
29.8 41.2 Elan`s 50% share of Tysabri ROW collaboration operating profit 56.1 82.5
19.5 21.3 Elan`s directly incurred costs 35.9 43.6
49.3 62.5 Net Tysabri ROW revenue 92.0 126.1

Tysabri ROW in-market sales for the second quarter of 2010 were $152.6 million
as compared to $129.4 million for the second quarter of 2009, an increase of
18%. As Tysabri ROW in-market sales are principally earned in the European
Union, second quarter in-market sales were negatively impacted by the
depreciation of the euro against the dollar. On a constant currency basis,
Tysabri ROW in-market sales for the second quarter of 2010 increased by $29.6
million, or 24%, compared to the second quarter of 2009.

At the end of June 2010, approximately 26,000 patients, principally in the
European Union, were on commercial therapy, an increase of 6% over the
approximately 24,600 (revised) who were on therapy at the end of March 2010 and
26% over the approximately 20,700 patients who were on therapy at the end of
June last year.

Other BioNeurology products

As expected, Azactam revenue decreased 91% to $1.9 million for the second
quarter of 2010, compared to $20.5 million for the same period of 2009. Elan
ceased distributing Azactam as of March 31, 2010 and will not earn any future
revenues from this product. The $1.9 million of revenue in the second quarter of
2010 relates to the timing of delivery of shipments in late March 2010.

On March 4, 2010, Elan entered into a definitive agreement to divest its Prialt
assets and rights to Azur Pharma International Limited and this transaction
subsequently closed on May 5, 2010. As a result, Prialt revenue decreased 65% to
$1.6 million for the second quarter of 2010, compared to $4.6 million for the
same period of 2009.

Revenue from the EDT business

For the first half of 2010, revenue from the EDT business decreased by 4% to
$132.4 million from $138.6 million for the same period of 2009. For the second
quarter of 2010, revenue from the EDT business decreased by 29% to $56.0 million
from $78.9 million for the second quarter of 2009.

Three Months Ended Six Months Ended
June 30 June 30
2009 2010 2009 2010
US$m US$m US$m US$m
Product revenue
Manufacturing revenue and royalties
16.4 13.8 Tricor 30.0 25.0
– 1.9 Ampyra – 20.8
9.2 7.8 Focalin® XR / RitalinLA® 17.6 16.6
4.9 5.0 Verelan® 10.8 11.9
3.9 2.9 Naprelan® 5.9 7.8
10.3 0.4 Skelaxin 15.6 5.2
23.9 19.8 Other 46.2 37.0
68.6 51.6 Total manufacturing revenue and royalties 126.1 124.3

Contract revenue
10.3 4.4 Research revenue and milestones 12.5 8.1

78.9 56.0 Total revenue from the EDT business 138.6 132.4

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
for the second quarter of 2010 or 2009.

In January 2010, the FDA approved Ampyra as a treatment to improve walking
ability in patients with MS; this was demonstrated by an improvement in walking
speed. The product was subsequently launched in the United States in March 2010.
Ampyra, which is globally licensed to Acorda, is marketed and distributed in the
United States by Acorda and will be marketed and distributed outside the United
States by Biogen Idec, Acorda`s sub-licensee, where it is called Fampridine
Prolonged Release (Fampridine-PR) tablets. EDT manufactures supplies of Ampyra
for the global market at its Athlone, Ireland facility, under a supply agreement
with Acorda.

Manufacturing and royalty revenue recorded for Ampyra in the six months ended
June 30, 2010 of $20.8 million principally reflects shipments to Acorda in the
first quarter of 2010 to satisfy Acorda`s initial stocking requirements for the
U.S. launch of the product as well as build-up of safety stock supply. As Elan
records revenue upon shipment of Ampyra to Acorda, this revenue was not
contingent upon ultimate sale of the shipped product by Acorda or its customers.
U.S. Ampyra revenues for the remainder of the year are expected to be based only
on ongoing restocking and supply needs.

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. As a result of
the approval and launch of generic forms of Skelaxin in April 2010, EDT`s
royalty revenues from this product have significantly declined.

Research revenue and milestones includes revenue earned from performing R&D
services on behalf of clients and technology licensing. Revenue in the second
quarter of 2009 included a license fee of $7.7 million from Acorda as a result
of Acorda entering into an agreement with Biogen Idec to develop and
commercialize Fampridine-PR in markets outside the United States.

Additional analyses of the results between the BioNeurology and EDT businesses
are set out in Appendices I and II. For the first half of 2010, Adjusted EBITDA
from the EDT business decreased to $46.5 million from $59.0 million for the same
period of 2009, reflecting the transition of this business away from some of the
older products to newer products, such as Ampyra and Invega Sustenna. For the
second quarter of 2010, Adjusted EBITDA from the EDT business decreased by $25.3
million to $13.0 million from $38.3 million for the same period of 2009. EDT
revenues, and their impact on Adjusted EBITDA, vary from quarter to quarter
based on a number of factors, including the timing of customer orders and
license fees earned, and contractual in-market sales hurdles for royalties.

Operating Expenses

Selling, general and administrative

SG&A expenses decreased by 8% to $63.8 million for the second quarter of 2010
from $69.1 million for the same period of 2009. The decrease principally
reflects reduced sales and marketing costs and amortization expense related to
Prialt, along with continued cost control. SG&A expense for the three and six
months ended June 30, 2010 and 2009 can be analyzed as follows:

Three Months Ended Six Months Ended
June 30 June 30
2009 2010 2009 2010
US$m US$m US$m US$m
52.3 47.7 BioNeurology 105.8 95.6
8.3 8.6 EDT 16.2 16.8
4.1 2.9 Depreciation and amortization 8.2 6.1
4.4 4.6 Share-based compensation 9.9 9.3
69.1 63.8 Total 140.1 127.8

The SG&A expenses related to the Tysabri ROW sales are reflected in the Tysabri
ROW revenue as previously described on page 11.

Research and development

Three Months Ended Six Months Ended
June 30 June 30
2009 2010 2009 2010
US$m US$m US$m US$m
40.2 51.5 BioNeurology 80.8 103.2
11.6 14.0 EDT 23.6 27.1
29.1 – AIP 57.0 –
80.9 65.5 Total 161.4 130.3

For the second quarter of 2010, R&D expenses decreased to $65.5 million from
$80.9 million for the same period of 2009. The decrease primarily relates to the
cost savings as a result of the divestment of AIP in the third quarter of 2009.
Excluding AIP, R&D expenses increased by $13.7 million, principally reflecting
increased investment in R&D initiatives related to Tysabri and EDT.

The Phase 2 study of ELND005 has completed and the data is being analyzed.

A Phase 1b study to evaluate the safety and efficacy of subcutaneous ELND002 in
patients with relapsing forms of MS has been initiated.

In the second quarter of 2010, Elan and Biogen Idec completed enrollment of
1,000 patients in STRATIFY 1. This trial is designed to prospectively confirm
the percentage of the MS population that is positive for anti-JC Virus
antibodies and the false negative rate for this test.

On July 15, 2010 the Tysabri label was updated to include prior
immunosuppressant use as a risk factor for development of PML.

During the second quarter of 2010, Tysabri exceeded 100,000 patient years of
exposure.

Elan and Biogen-Idec continue enrolling the RESTORE clinical trial to examine
treatment interruption of Tysabri. This is a randomized, rater blinded trial in
patients who interrupt treatment with Tysabri with or without being treated with
other immunomodulatory drugs. The main purpose of the study is to find out the
following when participants stop taking Tysabri for 24 weeks: how quickly the
effects that Tysabri has on its target receptor return to normal, when MS
symptoms return and if other drugs for MS may help control MS symptoms during
the Tysabri interruption period. This study will also explore how quickly the
beneficial effects of Tysabri return after resuming Tysabri dosing.

Settlement reserve

On July 15, 2010, Elan announced that it had reached an agreement in principle
with the U.S. Attorney`s Office for the District of Massachusetts with respect
to the previously disclosed U.S. Department of Justice`s investigation of sales
and marketing practices for Zonegran, which Elan divested in 2004.

If the agreement in principle is finalized, Elan expects to pay $203.5 million
as part of a comprehensive settlement for all U.S. federal and related state
Medicaid claims and has placed $203.5 million into an escrow account to cover
the proposed settlement amount. The Company has established a reserve of $206.3
million for this expected settlement and related costs.

As part of this agreement in principle, Elan Pharmaceuticals, Inc., a U.S.
subsidiary of Elan Corporation, plc, expects to plead guilty to a misdemeanor
violation of the U.S. Federal Food, Drug and Cosmetic Act and to enter into a
Corporate Integrity Agreement with the Office of Inspector General of the U.S.
Department of Health and Human Services.

While Elan expects to negotiate and enter into final settlement and Corporate
Integrity Agreements, there can be no assurance as to when or if any settlement
will be finalized or, if a settlement is finalized, what the final terms of the
settlement will be. Additionally, the proposed resolution of the Zonegran
investigation could give rise to other litigation by state government entities
or private parties.

Other net charges

Other net charges for the three and six months ended June 30, 2010 and 2009 were
as follows:

Three Months Ended Six Months Ended
June 30 June 30
2009 2010 2009 2010
US$m US$m US$m US$m
3.0 1.4 Severance and restructuring charges 25.2 3.5
– 0.2 Net loss on divestment of Prialt business – 1.6
– – Asset impairment charges 15.4 –
5.0 – In-process research and development 5.0 –
– – Legal settlement gain (18.0) –
8.0 1.6 Total 27.6 5.1

Other net charges for the three months ended June 30, 2010 included $1.4 million
of severance and restructuring charges principally associated with the
realignment of resources announced in 2009.

On March 4, 2010, Elan entered into a definitive agreement to divest its Prialt
assets and rights to Azur Pharma International Limited. This transaction
subsequently closed on May 5, 2010. Elan recorded a net loss of $1.6 million
arising from the Prialt divestment in the six months ended June 30, 2010.

For the three months ended June 30, 2009, other net charges of $8.0 million
consisted of an in-process research and development charge of $5.0 million in
respect of a license fee payable under a collaboration agreement with
PharmatrophiX and severance and restructuring charges of $3.0 million.

Net Interest and Investment Gains and Tax

The net interest expense for the second quarter of 2010 decreased to $26.4
million compared to $35.8 million in the second quarter of 2009, primarily due
to lower interest expense following the Johnson & Johnson and debt refinancing
transactions in the second half of 2009.

The net investment gains of $8.4 million in the second quarter of 2010 include a
gain of $7.9 million related to a recovery realized on a previously impaired
investment in auction rate securities, and a gain on disposal of investment
securities of $0.5 million.

The benefit from income taxes was $14.8 million in the second quarter of 2010,
compared to a provision of $15.9 million in the second quarter of 2009. The tax
benefit for the second quarter of 2010 reflects changes to U.S. net income, in
addition to one-off tax benefits, recorded during the quarter.

Movement in Shareholders` Equity

Three Months ended Six Months ended

June 30, 2010
June 30, 2010

US$m
US$m
500.1 Opening shareholders` equity 494.2
(213.1 ) Net loss for the period (215.1 )
7.5 Share based compensation 17.0
(6.7 ) Minimum pension liability (6.7 )
0.1 Issuance of share capital 0.9
(3.8 ) Other (6.2 )
284.1 Closing shareholders` equity 284.1

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 and Irish Stock Exchanges. For additional information about the
Company, please visit 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, which may be
severely constrained by increases in the incidence of serious adverse events
(including death) associated with Tysabri (in particular, by increases in the
incidence rate for cases of PML), or by competition from existing or new
therapies (in particular, oral therapiesfiled for U.S. and European approval),
and the potential for the successful development and commercialization of
additional 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 our research and development
activities, and research and development activities in which we retain an
interest, 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; our dependence on Johnson & Johnson and
Pfizer for the success of AIP; failure to comply with kickback and false claims
laws including in respect to past practices related to the marketing of Zonegran
which are being investigated by the U.S. Department of Justice and the U.S.
Department of Health and Human Services (we have reached an agreement in
principle to resolve this Zonegran matter which, if finalized, will require Elan
to pay a $203.5 million fine and to take other actions that could have a
material adverse effect on Elan); competitive developments affecting Elan`s
products; 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; whether the proposed separation of EDT occurs and, if the
separation occurs, on what terms; legislation affecting pharmaceutical pricing
and reimbursement, both domestically and internationally; 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, in particular we ceased distributing Azactam as of March 31, 2010 and we
will cease distributing Maxipime as of September 30, 2010; 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, 2009, 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

Three Months Ended Three Months Ended
June 30, 2009 June 30, 2010
Bio- EDT Total Bio- EDT Total

Neurology
Neurology
US$m US$m US$m US$m US$m US$m
Revenue
202.0 68.6 270.6 Product revenue 212.9 51.6 264.5
– 10.3 10.3 Contract revenue – 4.4 4.4
202.0 78.9 280.9 Total revenue 212.9 56.0 268.9
109.9 29.5 139.4 Cost of goods sold 112.6 29.0 141.6
92.1 49.4 141.5 Gross margin 100.3 27.0 127.3

Operating Expenses
59.4 9.7 69.1 Selling, general and administrative(1) 53.8 10.0 63.8
69.3 11.6 80.9 Research and development 51.5 14.0 65.5
– – – Settlement reserve charge 206.3 – 206.3
7.2 0.8 8.0 Other net charges 1.2 0.4 1.6
135.9 22.1 158.0 Total operating expenses 312.8 24.4 337.2
(43.8 ) 27.3 (16.5 ) Operating income/(loss) (212.5 ) 2.6 (209.9 )

10.5 8.6 19.1 Depreciation and amortization 7.7 8.0 15.7
– (0.3 ) (0.3 ) Amortized fees (0.1 ) (0.2 ) (0.3 )
6.9 1.9 8.8 Share-based compensation 5.4 2.2 7.6
– – – Settlement reserve charge 206.3 – 206.3
7.2 0.8 8.0 Other net charges 1.2 0.4 1.6
(19.2 ) 38.3 19.1 Adjusted EBITDA 8.0 13.0 21.0
(1) General and corporate costs have been allocated between the two segments.

Appendix II

Six Months Ended Six Months Ended
June 30, 2009 June 30, 2010
Bio- EDT Total Bio- EDT Total

Neurology
Neurology
US$m US$m US$m US$m US$m US$m
Revenue
387.4 126.1 513.5 Product revenue 446.0 124.3 570.3
– 12.5 12.5 Contract revenue 1.0 8.1 9.1
387.4 138.6 526.0 Total revenue 447.0 132.4 579.4
210.2 58.0 268.2 Cost of goods sold 227.3 59.8 287.1
177.2 80.6 257.8 Gross margin 219.7 72.6 292.3

Operating Expenses
121.3 18.8 140.1 Selling, general and administrative(1) 108.3 19.5 127.8
137.8 23.6 161.4 Research and development 103.2 27.1 130.3
– – – Settlement reserve charge 206.3 – 206.3
24.1 3.5 27.6 Other net charges 4.7 0.4 5.1
283.2 45.9 329.1 Total operating expenses 422.5 47.0 469.5
(106.0) 34.7 (71.3) Operating income/(loss) (202.8) 25.6 (177.2)

21.0 17.2 38.2 Depreciation and amortization 15.0 16.5 31.5
– (0.4) (0.4) Amortized fees (0.2) (0.2) (0.4)
15.0 4.0 19.0 Share-based compensation 12.9 4.2 17.1
– – – Settlement reserve charge 206.3 – 206.3
24.1 3.5 27.6 Other net charges 4.7 0.4 5.1
(45.9) 59.0 13.1 Adjusted EBITDA 35.9 46.5 82.4
(1) General and corporate costs have been allocated between the two segments.

Elan Corporation, plc
Investor Relations:
Chris Burns, 800-252-3526
David Marshall, 353-1-709-4444
or
Media Relations:
Mary Stutts, 650-794-4403
Paul McSharry, 353-1-663-3600

Copyright Business Wire 2010