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Biotech / Medical : Elan Corporation, plc (ELN) -- Ignore unavailable to you. Want to Upgrade?

To: blankmind who wrote (777)	12/20/1999 9:04:00 AM
From: William Partmann	Read Replies (1) \| Respond to of 10345

From II: Magic 25 Dec 20, 1999 Elans Drug Pipeline Moves Forward Analyst: Bob Hirschfeld (12/20/99) Over the last month, Elan (NYSE:ELN - news) has made real progress on its goal to move its developing drugs further along the process towards eventual FDA approval. On December 8, Ligand Pharmaceuticals (NASDAQ:LGND - news) announced a $5 million milestone payment, payable in Ligand shares, for the completion of Phase III patient enrollment in pivotal studies for Morphelan, a form of morphine used in oncology and HIV patients. Ligand is licensing the right to Morphelan in the U.S. and Canada from Elan. Elan now owns about 5.7% of Ligand's common stock. In early December, the journal Nature carried an article about Elan 's work in beta-secretase, which describes the company's work with the protein Asp2, which turns naturally occurring compounds in the brain into dense plaques, beta-amyloids, that cause Alzheimer's. That work stands in addition to Elan's work on a vaccine candidate, currently dubbed AN-1792, for treating Alzheimer's. The company has initiated Phase 1 clinical studies of AN 1792, and Gruntal 's Jeff Kraws thinks the drug has “the potential to reach the market over the next 3-6 years.” According to Merrill Lynch's Richard Vietor, though Elan “appears to be establishing itself as a world leader in Alzheimer's disease research, it is not yet a factor in the company's valuation.” The Alzheimer's market is potentially very large. About 4 million people suffer from the disease, a number commensurate with 10% of the over-65 population, and 25% of the over-85 population. The data so far presented on AN 1792 are, Kraws writes, “among the strongest seen to date.” Numerous analysts have noted Elan's promising Alzheimers' disease programs, which represent a potential major breakthrough, as well the company's five products in late-stage development, three of which are awaiting FDA approval and near-term launch: Zonegran, for treatment of epilepsy, and an expected launch the first quarter of 2000; Neurobloc, for cervical dystonia, expected to be approved and launched in early 2000, and Ziconotide, for chronic pain, expected to launch the third quarter of 2000. Despite the bright outlook, the company's shares remain quite cheap. Disappointing third quarter results along with a delay in its migraine headache drug, Frovatriptan, caused the shares to tumble in recent months. Putting its $1 billion cash stash to use, Elan recently announced a $259 million stock buy back of two companies set up originally to finance drug research and development. As a result, Elan will now consolidate more development expenses on its income statement. Kraws sees the shares rising to $43, noting that the stock trades at a substantial discount to its peers. “We believe that as investors become more comfortable with the near-term growth potential of Elan…they should give the company a higher valuation,” he said in a morning note. Elan has a brimming pipeline, acknowledged status as the largest independent drug delivery company in the world, and $1 billion cash cushion. We look for Elan to earn about $1.50 per share for 2000. On that estimate, Elan shares currently trade at an 18 multiple on forward earnings, which is incredibly inexpensive in light of the company's 20+% earnings growth rate and bulging drug pipeline. Updated December 20, 1999 with ELN trading at $24.75 per share. Recommended 12/10/99 at $27.06 techstocks.com