Has Elan Bottomed Out?

by Andrew Vaino
peternavarro.com


I've written a couple of times about Elan (ELN). Elan's big drug is Tysabri, which was recently reintroduced as a treatment for Multiple Sclerosis (MS). Since announcement of the re-introduction the stock has been in a tailspin ("buy the rumor, sell the story").

I wrote in the Daily Blog a few months ago I expected Elan to report strong Q3 sales for Tysabri. I was wrong and took a bit of a haircut as the stock continued to drop. While Tysabri sales weren't as good as expected, I still like Elan, and consider Tysabri to be a promising drug. Given the more rigorous measures that need to be done before Tysabri can be prescribed (MRI of brain) it's not surprising reintroduction has been slow. It's still the best drug around for MS.

Elan is expected to file with the FDA an NDA to use Tysabri to treat Crohn's disease. They have already filed the corresponding application in Europe (they're an Irish company). In addition, they have reported some exciting early clinical results on an antibody to treat mild to moderate Alzheimer's disease. Full results of the Phase 2 study should be released in the next few months.

I still firmly believe Elan's prospects are good. Looking at the chart (MACD-ST is bullish but stock is oversold) I think ELN bottomed out last week and is set to head back to the 20s.

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