I own a little ELN and think they are indeed a good value here. As Rick pointed out with INCR, they still do their fancy accounting stuff, but it's now a tiny fraction of their revenue.
Here's an old Signals article that discusses the "Elan Model:"
In the "Elan Formula" model, the buyer cycles money (in the form of convertible exchangeable preferred shares) through the seller into a newly formed company until the risks are reduced, according to Wirth, after which the buyer exchanges those rights for a less-than-50 percent ownership in the new company. This model "serves the buyer's interest enormously well," he explained. In fact, it is the only model that totally spares the buyer's P&L.
Analysts once predicted that Elan's model would also fall prey to the new accounting standards; however, since Elan still uses this partnering structure, it may have escaped. "There were suspicions that this formula wouldn't work under the new accounting rules," Wirth commented, "but the rules did not specifically address the Elan structure."
signalsmag.com
I wouldn't be surprised to see some smart institutional money (there must be some, someplace <g>) moving funds out of the struggling big pharma into the emerging pharma like ELN and FRX.
Peter |
