Saturday, August 02, 2008

Elan (NYSE:ELN): PML Near Term Pain could Yield Long Term Tysabri Gain - Leerink

By: Notable Calls Friday, August 01, 2008 12:08 PM
Sectors: Medical
Symbols: BIIB, ELN - Leerink Swann is back with some comments on Elan (NYSE:ELN) following yesterday's PML related sell-off:

- Bottom Line: Report of two newly confirmed cases of PML in MS patients treated with Tysabri are likely to create significant volatility in BIIB and ELN stocks today. But they believe the occurrence could create a positive long-term environment for the drug by demonstrating successful intervention using plasmapharesis
(PLEX, initial details of which were presented at ECTRIMS in October 2007).

The patients who developed PML were treated in Europe, a region for which a TOUCH program has not been established.
A MEDACorp MS consultant noted to the firm last night that the lack of confirmed cases of PML in the U.S. may suggest that the RiskMAP is effective. As of the end of 2Q:08, BIIB and ELN reported that 17,800 patients were being treated with Tysabri in the U.S. and 13,400 internationally.

They believe it highly unlikely that the FDA would remove Tysabri from the market once again following these latest cases of PML for reasons that include the fact that no confirmed cases have occurred in the U.S. and they suspect the Agency has gained comfort that the TOUCH program is working.

Second, they note comments made by Dr. Russ Katz, Director of the Division of Neurology Products at the March 2006 FDA advisory panel where it was recommended that Tysabri be reintroduced into the U.S. market. Prior to the start of the panel, Dr. Katz said "It is absolutely critical to state at this point that if marketing is permitted, we fully expect that additional cases of PML, many likely to be fatal, will occur."

Key will be whether the recent incidences of PML will impede growth in Europe or perhaps contract usage and if physicians in the U.S. will discontinue treatment or at least not initiate treatment in new patients.

Notablecalls: I have bought some ELN for my L-T investing acccount here around $11. I see the PML problem as a minor issue. The only risk here are the big funds that may be dumping the stock over the next couple of weeks due to risk-management issues.

On the valuation side, ELN's now dirt cheap. I suggest you ignore the media ga-ga and start buying some.

Long ELN


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