Elan Corporation (ELN)

Net Loss and Adjusted EBITDA

The net loss for the third quarter of 2005 amounted to $67.1 million, a decrease of 38% over the $107.8 million reported in the same quarter of 2004, principally due to strong growth in product revenue from our core business, a net gain on divestment of businesses, and costs of $55.0 million related to the settlements of the shareholder class action lawsuit and the United States Securities and Exchange Commission (SEC) investigation which were incurred in the third quarter of 2004, offset by increased operating expenses related to Tysabri™.

Negative Adjusted EBITDA was $42.1 million in the third quarter of 2005, compared to $56.7 million in the third quarter of 2004, and included negative Adjusted EBITDA of $36.7 million related to Tysabri (2004: $31.9 million). Adjusted EBITDA for the rest of the business, excluding costs related to Tysabri, is targeted to get to breakeven by the end of 2005 and was negative $5.4 million in the third quarter of 2005 (2004: $24.8 million). 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.

Net Loss and Adjusted EBITDA

The net loss for the second quarter of 2005 amounted to $142.6 million, an increase of 21% over the $117.6 million reported in the same quarter of 2004, principally because of the costs associated with Tysabri™, (see Appendix II for an analysis of the results broken out between Tysabri and rest of business), a charge associated with retiring debt early and the disposal of products during 2004, compensated for by the strong growth in the rest of the business and reduced investment losses.

Negative Adjusted EBITDA was $58.7 million in the second quarter of 2005, compared to $45.7 million in the second quarter of 2004, and included negative Adjusted EBITDA of $38.2 million related to Tysabri. Adjusted EBITDA for the rest of the business, excluding costs related to Tysabri, is targeted to get to breakeven by the end of 2005 and was negative $20.5 million in the second quarter of 2005 after including $8.0 million in litigation settlement costs. 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.

As previously announced on February 28, 2005, Elan and Biogen Idec, Inc. (Biogen Idec) voluntarily suspended Tysabri from the U.S. market and all ongoing clinical trials based on reports of progressive multifocal leukoencephalopathy (PML), a rare and potentially fatal, demyelinating disease of the central nervous system. Elan and Biogen Idec’s comprehensive safety evaluation concerning Tysabri is ongoing. The results of this safety evaluation, which we expect to complete by the end of the summer, will then be discussed with regulatory agencies to determine the appropriate risk benefit profile and the path forward for Tysabri.