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I am a neurologist, also in Biotech. I have to say that I use M as a tool, so don't listen to me for investing advice. I really have no interest or use for anything but the most fundamental of technical analysis. My interest is always whether an advance will meet an unmet clinical need. The thread for ELN is too long to recapitulate. From a clinical standpoint, Tysabri is a real advance in the treatment of MS. IMO, T is a great example of a very bad partnering decision of ELN with Biogen. Rather than take market share from Avonex, an early decision was made to aggressively test combination therapy. Because ELN was just about to go belly up, some of these issues Wild rightfully point exist in the company today, they compromised in the development of their asset and suffered the consequences. Now they are digging themselves out of this mess. From a regulatory standpoint, the FDA will be very conservative with the advancement of this drug in MS and now inflammatory bowel disease. Baby steps that will not meet prior earnings expectations of the drug for awhile, if ever. But it will continue to grow and may find a toe-hold in other autoimmune diseases. Do not long ELN on the basis on T. I got in frankly when the price was below 2 bucks and taken money out a couple of times. I keep it now purely as a speculative stock and freely admit that IMO it is less likely to perform over the next 1-2 years than an index.

AAB-001 going into ph3, on the other hand, is where the real play in the price over the long term. It has brilliant preclinical data and an earlier version went into a few humans. A small subset had an immune reaction to the MAb and the trial was stopped before endpoints reached. They have been able to glean from the patients response that only a small number of amino acid residues in AAB-001 were responsible for the reaction and have been able to take them out. Ph2 data now is very encouraging for safety. So now they are going into first ph3. I wouldn't be surprised if they start up a 2nd shortly. AD is obviously a huge market with no real therapeutic options currently. It is primed for a major advancement. But AAB-001 has plenty of competitors in secretase inhibitors and amyloid inhibitors, among others. So it becomes a question of which technology(s) you want to put your nickel(s) on. I am putting together a basket of 5 stocks that have AD that I will long. Lastly, I have always liked Wild's point that you should sell before the results on pivotal trials are announced. I agree that the stocks tend to be pretty fully valued on the basis of the potential answer. Save yourself some headaches and take the profit early.

That should read: "I have _no_ problem if others like ELN"

TJ, I did very well long ELN on the run-up from $5 to $20 range in 2003/2004. Then when everyone was giddy that Tysabri was about to be approved - with the stock near $25 - I advised shorting the stock at that point. Within a few days, the stock dropped to $5. I cashed in my short position at that point and advised waiting for a better entry opportunity.

Yes, I do have experience in the medical field, especially in regards to having experience in the kind of drugs Tysrabi is, and the really, really - er fatal - side effect the drug has.

I also have much experience evaluating companies from an investment perspective. If you want to pay $9 billion ELN gamble then I have no problem with that. But it is seriously over-valued for such a speculative biotech.

ELN is loaded with debt, and is not expected to be profitable for many many years - even if everything goes right - and its excessive valuation at this juncture makes it a terrific short candidate when the current rally stalls. I currently no position in ELN, but waiting for an opportunity to re-enter a short position.

I have problem if others like ELN. All I can do is call it how I see the numbers stacking up - just as I warned of the decimation that would hit the housing sector all those years ago once the bubble, and the super-profits to be made in energy patch when no one was interested in the sector in 2002ish (see the "Oil: the play of the decade" thread I opened back in 2002.) I do not get them all right, now do I expect to get them all right in the future, and maybe ELN will go on to deliver on its speculative promise.

Overall I would rather gamble on a DNDN miracle than the ELN one, given the data and valuations we currently have, though I'd rather be buying in the $3 range for both companies, which are numbers I expect to see in the next couple of years.

I would like to see the 'Performance Zones" data for wildmap, cliveg, and djacoby so that I know who's word carries the greatest weight.

I've met cliveg... if memory serves he works in the medical field. His profile page says he's a "clinical chemist". I recall one of his other healthcare-related stock reccommendations working out VERY well for me. It was a medical laser device company, though, not a biotech.

Reading djacoby's last post, it sounds like he's a doctor, which would be confirmed by his profile page description: "MD PhD Neuro". Sounds like a guy that might have some idea what he's talking about vis-a-vis Tysabri/ELN/biotech in general...

Wildmap's profile says "Chief Technical Strategist for AlphaKing.com".... which means abolutely nothing to me, though I seem to recall long ago him posting something about working in a neonatal ward.... ???

Please post an image of your performance zones page so I'll know who's made money investing in biotech/healthcare stocks, and I'll thereby know better whom to listen to. It'll look something like this:

http://img509.imageshack.us/img509/7776/audvxzonesax1.jpg

I'm looking forward to your responses.

I own ELN with real dollars, so my bent is obvious. Tysabri looks clean based on the data they presented at the neurology meetings. Many drugs associated with sporadic PML are used in refractory medical conditions, which is why the FDA has placed such a difficult black box around the drug. Once on, a black box is almost impossible to remove. The black clouds on the horizen is FYT720 a Novartis drug that is in phIII that is oral and looks spectacular in MRI and clinical outcomes so far. Works via a very interesting mechanism, one that is unlikely to have PML as a concern (other safety issues perhaps, but not PML). I believe that over time Tysabri will work its way into the repetoire of relapsing MS treatment but not for years to come.
AAB-001 is the re-engineered MAb that was stopped due to (again) serious safety issues. But ELN is very confident the solved the know and solved the problems. It is highly speculative, wild, works great in a mouse with AD, but of course they have a brain about he size of a pea. The field of AD has had so many insignificant approvals (anyone who has treated a patient with any of the cholinesterase inhibitors know what I am talking about) that they are really poised for a therapy that makes a clinically and socially relevant difference. This is possibly that. Big risk, big reward IMO. That is of course what biotech is about.

No doubt Élan is a risky investment and is not for everyone. Folks like me see extraordinary potential here in AAB-001 and I fully expect Tysabri to achieve blockbuster status in another year or so for the MS market. I won?t bother to discuss Tysabri?s safety profile here but anyone interested can read the AAN report.
http://biz.yahoo.com/bw/070503/20070503005129.html?.v=1

FDA will rule on Tysabri?s use for Crohn?s disease later this year. Huge potential here. Tysabri?s trial for Oncology could start in 08. Won?t even include Nanotechnology or the Parkinson?s program. I have no concern regarding the debt level which is due in 2012. Earnings by then will far exceed the debt. I?ll take the risk and hold all shares here because the reward could be astronomical. Time will tell. Good luck.

The problem with ELN is its price, and its balance sheet. The company is not expected to be profitable in the next two years, and its primary products for future growth while interesting are also very speculative. Most drugs that complete phase 3 trials never make it past the FDA, and drugs with problems - such as Tysabri - usually are removed from the market by the FDA. So there is zero guarantee that the future newsflow of this company won't be seriously bad.

So ELN, IMHO, is a very speculative biotech company at best. So how much should such a speculative biotech company be valued at?

The current value is $8 billion dollars. Trading at 10 times future expected sales (which could fail to come in if any bad news lands on the Tysabri front, which I expect to happen.) It trades at massive 1,190 times book value. And the most scary part of the balance sheet is the $1.7 billion debt, which is unheard of for a speculative biotech stock. And last but not least, the number of shares being released each year continues to grow, which dilutes whatever meager share-holder value there is.

With its current products, and its speculative pipe-line, I would say it trade nearer $1 to $2 billion dollars in market cap, which suggest ELN should trade nearer the $2 to $4 range - absent any bad news.

ELN is one of the most dangerously risky stocks out there, IMHO.

Elan?s decision to move bapineuzumab, AAB-001, to Phase 3 before the end of Phase 2 studies is a monumental occurrence IMHO. I can?t recall ever seeing this done before.

?This decision was based on the seriousness of the disease and the totality of what the companies have learned from their immunotherapy programs, including a scheduled Interim look at data from an ongoing Phase 2 study, which remains blinded. No conclusion about the Phase 2 study can be drawn until the study is completed and the final data are analyzed and released in 2008. Phase 3 clinical trial design will be finalized with regulatory agencies, and subject to regulatory approval, it is intended for the trial to begin in the second half of 2007.?

I continue to hold all my shares of ELN and believe the potential here will be astronomical in a few years. I firmly believe AAB-001 is a winner. The AD market worldwide is probably 25 million. No idea what the drug will sell for but $12,000 - $25,000 is a good range. Figure the maths.
Good luck to all the longs here that believe in this company and have held on these past turbulent years.

My downside target for ELN remains $5 so long as there are no bad news bombs landing that nixes Tysadri completely (which is a real possibility.)

JANUARY 09 call puts.

ELN seems it could snap up any time.

I also dont know what is played behind curtains.

My (outsider's) take on ELN is that the size of the next move will outstripp direction. In other words, the risk is much too high.

To throw in a few cents, Jan calls and puts seem cheap

Thanks, good article, but short on the reasons why Elan is such a good investment other than that one our top performers likes it for some reason. I have more than 25 years in the pharmaceutical industry and know that it ain't over until the fat lady (in this case the FDA) sings. In this case I wonder who knows what that hasn't being published yet by the analysts. ELN seems to have great upside potential, but that comes with a great deal of risk.