Elan shares collapse

full forward

Down 60% last time I looked. MS drug suspended.

TheLedge

Big Question is whether or not they'll bounce back like they did last time...

what do ye think?

worth a few thousand investing?

full forward

A friend of mine got them at €2.45 and sold some at €12 and at €18. He's laughing now.

It seems one person who was using their MS drug died. The MS drug was very important to them and they could be in serious trouble without it. What if more people die? What if they all die? There is a small chance that the market is over reacting to this news. Its too high risk for me though.

hmmm

You might as well put the money on a horse, you're just gambling on the final outcome.

full forward

hmmm wrote:

You might as well put the money on a horse, you're just gambling on the final outcome.

Winning money on horses is luck but making money on the stock market is a skill.

damnyanks

full forward wrote:

Winning money on horses is luck but making money on the stock market is a skill.

Not if you are gambling on them bouncing back. Its the same thing

PADDYPOKER

5.50 Euro now.
Savage stuff!

LoneGunM@n

It looks like there may be an investigation of 3 executives of Biogen [Elan's partners in the marketing of the multiple sclerosis drug, Tysabri] due to the fact that they sold shares, making sizeable profits in the process in the days before the withdrawal of the drug.

http://www.usatoday.com/money/industries/health/drugs/2005-03-01-biogen-usat_x.htm

from USA Today
Biogen execs sold shares before drug was yanked
By Julie Schmit, USA TODAY
Three Biogen executives sold thousands of company shares in the two weeks before the company's multiple sclerosis drug, Tysabri, was withdrawn from the market because of safety concerns.
The drug's withdrawal Monday sent Biogen shares down 43%, while shares of Elan, its partner in marketing the drug, fell 70%. The companies together lost $16.9 billion in market value.

Biogen first informed the Food and Drug Administration on Feb. 18 of potential problems with Tysabri after one patient taking it died and another contracted a potentially fatal disease.

On the day of the FDA notification, Biogen Executive Vice President and general counsel Thomas Bucknum sold 89,700 shares for proceeds of about $1.9 million, the company's filing with the Securities and Exchange Commission shows.

On Feb. 15, Executive Chairman William Rastetter sold 120,313 shares for a profit of about $7.5 million, the filing shows. The transaction was part of his automatic sales plan, the company says.

On Feb. 14, Biogen director Robert Pangia sold 15,570 shares for a profit of $954,844, the SEC filing shows.

Biogen spokesman Jose Juves says all of the trades preceded any knowledge that the drug was going to be withdrawn and the transactions followed company policy.

Bucknum also was awarded new options on 55,000 shares on Feb. 17, the day the company's board approved a committee recommendation granting Biogen executives cash bonuses totaling $4.6 million based on their performance last year.

Juves says bonuses were granted because 2004 was a strong year for the company. The meeting was a regularly scheduled one.

Walter Ricciardi, head of the SEC's Boston office — where Biogen is based — declined to comment Tuesday, citing agency policy.

SEC filings show no sales by Elan insiders in the days before the FDA notification, Reuters reported.

Share prices of Biogen and Elan surged the past year on high expectations for Tysabri, one of the most promising new drugs in the pharmaceutical industry. Biogen closed Tuesday up 6.8% to $41.26.

The companies say they're hopeful the drug will be back on the market later this year after a closer review of safety concerns.

Tysabri sales were expected to account for more than a third of Biogen's expected 2008 revenue. Bennett Weintraub of Hibernia Southcoast expected total Tysabri sales of $2.8 billion in 2008, split evenly by Biogen and Elan.

In addition to the 120,313 shares sold Feb. 15, Rastetter unloaded 184,000 shares in May of last year, and transferred 281,600 shares that same month to another person, SEC filings show.

As of April 2, 2004, company documents show he owned 1.9 million shares.

Bucknum sold at least 98,000 shares last year.

RainyDay

full forward wrote:

Winning money on horses is luck but making money on the stock market is a skill.

A skill - where did you get that from? If it is a skill, how come none of the professional fund managers manage to consistently beat the market indexes?

full forward

RainyDay wrote:

A skill - where did you get that from? If it is a skill, how come none of the professional fund managers manage to consistently beat the market indexes?

FUnd managers need to buy a bit of everything so that they dont lose out on the next big thing. Oh, and try to tell Warren Buffet its not a skill.

Apparently some investors spotted that Biogen directors were selling their shares last week and they got out too. With the right information I believe it is possible to beat the markets.

fintan

full forward wrote:

Apparently some investors spotted that Biogen directors were selling their shares last week and they got out too. With the right information I believe it is possible to beat the markets.

Yes that information is called "insider information". Best of luck not getting caught!

full forward

fintan wrote:

Yes that information is called "insider information". Best of luck not getting caught!

Its insider information when the directors do it. They must declare any trades they make on shares of their own company so its quite legal for us to copy them. In fact some people only buy and sell shares when they see directors doing it.

Read this

http://money.msn.co.uk/investing/Insight/SpecialFeatures/ActiveInvestor/Directorssharedealings/default.asp

lomb

full forward wrote:

FUnd managers need to buy a bit of everything so that they dont lose out on the next big thing. Oh, and try to tell Warren Buffet its not a skill.

Apparently some investors spotted that Biogen directors were selling their shares last week and they got out too. With the right information I believe it is possible to beat the markets.

yeah basically fund managers will track the market so if elan was 10% of the iseq then unfortunately peoples pension funds are 10% elan.

RainyDay

lomb wrote:

yeah basically fund managers will track the market so if elan was 10% of the iseq then unfortunately peoples pension funds are 10% elan.

That's not fund management, that's index tracking. Quinn Life offer this service at a vastly reduced cost (no bid/offer spread, no allocation rate, just 1% p.a. admin fee) compared to other fund managers. Why would you want to pay for expensive fund managers when they just go out & track the index? A simply spreadsheet model can manage your fund for you if you just want to track the index.

full forward wrote:

With the right information I believe it is possible to beat the markets.

Your belief is quite charming, but I'd prefer to see some hard data showing that any fund manager has consistently managed to beat the market indices over the long term.

lomb

alot of companies are run by cowboys. so any faith u have would be misplaced really. as such it is very difficult putting any faith in the market. its hard to imagine but a senior director in a company can make 1.5 million or more and much more if the management depress the share price by raping the company then do a management buyout, this is where the real dollars are 5+million. this has happened to many companies.
saying all that the likes of elan where 3/4 of their worth is one drug is not a well run diversified company and shareholders with a deep knowledge of risk would have known this,so there is some skill in predicting the downsde.

RainyDay

lomb wrote:

alot of companies are run by cowboys. so any faith u have would be misplaced really. as such it is very difficult putting any faith in the market. its hard to imagine but a senior director in a company can make 1.5 million or more and much more if the management depress the share price by raping the company then do a management buyout, this is where the real dollars are 5+million. this has happened to many companies.
saying all that the likes of elan where 3/4 of their worth is one drug is not a well run diversified company and shareholders with a deep knowledge of risk would have known this,so there is some skill in predicting the downsde.

I know you don't really expect anyone to take the unsupported, broad generalisation of 'a lot of companies are run by cowboys' seriously, but just for the sake of debate, let's say you are right. That's not the point. Management don't set the share price - the market sets the share price. So even if they were all run by cowboys, the professional analysts (who do nothing else all day except analyse the companies, the markets, the competition) will be fairly clear on the strengths & weaknesses of the company and will set the price they are willing to pay for the share accordingly.

lomb

RainyDay wrote:

I know you don't really expect anyone to take the unsupported, broad generalisation of 'a lot of companies are run by cowboys' seriously, but just for the sake of debate, let's say you are right. That's not the point. Management don't set the share price - the market sets the share price. So even if they were all run by cowboys, the professional analysts (who do nothing else all day except analyse the companies, the markets, the competition) will be fairly clear on the strengths & weaknesses of the company and will set the price they are willing to pay for the share accordingly.

exactly, and if its poorly run then the profitability will drop as will the share price.
i personally couldnt care less what anyone thinks of the financial markets, but i will say this to potential investors in the stock market-invest not more than 20% of your money in any one company, and dont put it all in the same sector. this diversifies your risk
finally, i will say this everyone in this world who has money is a target. shareholders are seen as a big target simplyly because they are an easy target and any theft is faceless.
the world is full of people who can tell the differnece between an honest man and a liar and the funny thing is there arent any honest men. i think u should dwell on that.

RainyDay

Your advice on diversification is sound. I'd go further and say having 20% of your portfolio in any one share is still quite risky. Check out the 'buy the top ten shares' advice in the Askaboutmoney.com Guide.

I disagree with your position of shareholders as faceless targets. Shareholders are not victims. I'm fed up of hearing Eircom shareholders whinging about their losses. They all had the chance to sell up at a substantial profit post flotation, but they held on out for even bigger gains, and ended up with losses. If you put your money into the market, you need to be prepared for some losses.

lomb

RainyDay wrote:

Your advice on diversification is sound. I'd go further and say having 20% of your portfolio in any one share is still quite risky. Check out the 'buy the top ten shares' advice in the Askaboutmoney.com Guide.

I disagree with your position of shareholders as faceless targets. Shareholders are not victims. I'm fed up of hearing Eircom shareholders whinging about their losses. They all had the chance to sell up at a substantial profit post flotation, but they held on out for even bigger gains, and ended up with losses. If you put your money into the market, you need to be prepared for some losses.

yes u are right, even 20% is probably too much, maybe 10% is a better bet, say no more than 20% per sector as well. stick to well run companies like allied, boi, crh and that.

my experiance isnt just eircom, its listening to the aer lingus story, enron, worldcom, america on line time warner, waterford (although a victim of both shoddy management and the decline of the dollar)-this will be management taken over and they will make a fortune out of it as it still turns over 400million euro, and numerous numerous others. hell even crh was guilty of illegal activities like price fixing.

one of the big problems is options, if a manager gets say 5million of shares then he dilutes the other paying shareholders value which is ridiculous, and most sell them as soon as they receive them which depresses value further.

in fact a close relation of mine works for a us hi tec company and gets 2-3 million dollars a year in 'free shares' after paying the below market price, he sells them the same day he gets them. he was complaining to me how the boss gets 15million dollars a years worth and he only got 3.

shoddy management where they are very big headed and take over companies whereas there own is barely profitable, taking on vast debt in the process dilutes shareholders and increases the risk to value. usually when they can no longer meet the interest payments the shareholders are diluted from 100% owners to 5% owners and then the banks etc own 95% of the shares. this goes on all the time. 'debt for equity swap'

slave1

The unforunate death was not as a result of the élan drug Tysabri which is fully approved by the FDA, it was a patient on clinical trials being dosed Tysabri and Avonex - Avonex is not an élan drug, but that of its Tysabri partner, BiogenIdec.
The points to be made here are that.
It was the combination of drugs that is in question, not Tysabri in monotherapy
Avonex is BiogenIdec own MS drug so it was in their - not élans - interest to conduct this trial.
Tysabri remains fully approved and the FDA want it back on the market ASAP as it is TWICE as effective as its nearest rival.
The patient died of a subsidary infection - PML - that is extremely difficult to diagnose, hence in patient interest Tysabri in monotherapy was voluntarily pulled.
Unless a patient on Tysabri mono gets PML it will be back on the market this year, with a wanring not to take in conjunction with Avonex, this just slims the potential market down a little.
I know some pretty well off folk that are now millionaires due to investing in élan 3 years ago, this is not exaguration, then there are some who never sold but then this thread digresses into the unanswerable, when to sell.....
The shares are fantastic value at present if you have €5k that you are willing to kiss goodbye to, they have reasonable potential to be worth 4 times that in 2-3 years.
élan is not in the shadow of Enron today, there are no accounting irregularities, their liquidity is untouchable until 2011 and there is an excellent leader in place.
Buy and hold, enjoy the ride

lomb

doesnt elan have or had accounting irregularities?

bounty

im tempted to buy elan shares

where do you guys get stock info, forums or info sites?

ArthurDent

lomb wrote:

doesnt elan have or had accounting irregularities?

There was a settletment withthe SEC late last year -
http://www.google.ie/search?hl=en&lr=&prev=/search%3Fq%3Deln%26hl%3Den%26lr%3D%26sa%3DG&q=stocks:ELN+


See story on 26th oct


Elan Settles With SEC

By Robert Steyer
TheStreet.com Staff Reporter
10/26/2004 11:39 AM EDT
Click here for more stories by Robert Steyer

Shares of Elan rose Tuesday, following the Irish drugmaker's announcement that it had reached a tentative settlement with the Securities and Exchange Commission concerning disputes over accounting matters that have been under investigation for several years.

RainyDay

lomb wrote:

my experiance isnt just eircom, its listening to the aer lingus story, enron, worldcom, america on line time warner, waterford (although a victim of both shoddy management and the decline of the dollar)-this will be management taken over and they will make a fortune out of it as it still turns over 400million euro, and numerous numerous others. hell even crh was guilty of illegal activities like price fixing.

While I'm aware of claims about CRH, I wasn't aware that they had been found guilty of anything. Do you have a source for this?

For every Enron/Worldcom/AOL/Waterford, there are a hundred firms quietly working away delivering value to shareholders. You are selectively choosing the few bad apples and drawing unfair conclusions about the entire market as a result.

lomb wrote:

one of the big problems is options, if a manager gets say 5million of shares then he dilutes the other paying shareholders value which is ridiculous, and most sell them as soon as they receive them which depresses value further.

in fact a close relation of mine works for a us hi tec company and gets 2-3 million dollars a year in 'free shares' after paying the below market price, he sells them the same day he gets them. he was complaining to me how the boss gets 15million dollars a years worth and he only got 3.

You seem to be confusing share options & shares. Share options are normally an employee retention device which vest over a long term (typically 5 years). There are very, very few people getting 7-figure sums in either share options or shares. If your close relative is operating at board level in one of the biggies, then he may be telling the truth. Otherwise I suspect someone is exaggerating. Normally, when a company issues shares or share options to an employee, they simply buy these shares on the open market, so there is no dilution effect.

lomb wrote:

shoddy management where they are very big headed and take over companies whereas there own is barely profitable, taking on vast debt in the process dilutes shareholders and increases the risk to value. usually when they can no longer meet the interest payments the shareholders are diluted from 100% owners to 5% owners and then the banks etc own 95% of the shares. this goes on all the time. 'debt for equity swap'

But you are ignoring the fact that major takeover decisions would need board approval, and the board members are elected by the shareholders. The major pension funds will be very quick to block any such takeovers if they don't add value. Management don't get a free rein on these things - they do answer to the board, who in turn answer to the shareholders.

karltimber

bounty wrote:

im tempted to buy elan shares

where do you guys get stock info, forums or info sites?

******
Best place for just general info is Yahoo Finance and they have message boards. (taken with a bucket of salt)

I use Ameritrade -- easy to transfer cash from here and $11 trades including limits & stops.

Bought Elan last week.

slave1

"Normally, when a company issues shares or share options to an employee, they simply buy these shares on the open market, so there is no dilution effect"

Actually they are generally fresh share issues, think about it, 5000 shares for a middle mgt employee with a share price of $25, $125,000, not a hope.

Fresh issues are much cheaper - just capital duty payable - and approved in the articles and at AGM's, saves the co money in wages and the dilution effect is minimal.

Options are golden hand cuffs, when they go so do the employees

real figures, real company

RainyDay

slave1 wrote:

Actually they are generally fresh share issues, think about it, 5000 shares for a middle mgt employee with a share price of $25, $125,000, not a hope.

Fresh issues are much cheaper - just capital duty payable - and approved in the articles and at AGM's, saves the co money in wages and the dilution effect is minimal.

Please show your source for the 'fresh issues' claim. But have a read of this old but still relevant WSJ article first;

For one thing, companies are more active in buying back shares to offset growing numbers of options they are issuing to their employees. "The focus has been on the buybacks, but in many cases we as investors have simply been overlooking the other side of the equation," says Tim Morris, executive vice president of Bessemer Trust Co., a New York based money-management firm. "Yes, it's interesting if a company has been buying back its shares, but if with the other hand it's issuing shares through options, what's been gained here?"

or this Taxopedia.com article

Another reason for a buyback is to reduce dilution caused by employee stock option plans. Companies that gave a free lunch by issuing massive stock options to employees during the big bull market of the late 90s have paid the price because every option that is exercised increases outstanding shares and reduces EPS. Many companies (especially the techs) feel they have to start repurchasing shares to avoid excessive dilution, which would drive down share price even further.

The dilution effect is exactly the same as the cost of purchasing shares on the open market, down to the very last penny.

slave1

the source is my job in the company I work for, an Irish/US multinational, the options are in the articles and decided upon at agms/committee meetings, shares are fresh issues which only suffer 0.5% capital duty
for obvious reasons I can't name company
same in the previous company I worked in
you are correct that dilution is the same whether you buy back or whether you issue fresh shares, its the cost that is the point
5000 shares for a mid manager @ $25/share = $125k, not a hope as no company could afford this
5000 shares freshly issued = 5000 * 25 * 0.005 = $625
The dilution effect is real alright, however the existing shareholders should - perfect market hypothesis - realise they are better in the long run with the fresh issue as the company does not incur anywhere near the same level of expense. As the expense is less the company has more money available to generate future profits.
This gives the shareholder two benefits
1. More money available to reinvest at the companies cost of capital
2. Retention of the big boys - leadership retention is a major play in share valuations.

Articles are well and good, but what they are really after is forcing the company to buy on the open market which is rather expensive. This will in turn stop companies in purchasing shares for employees altogether. Enron and Tyco had bad vibes because snr mgt were getting huge share options and this was leading them to making decisions more geared to "inflating" the share price, rather than the long-term good of the company.

New accouting regulations are in place which will restrict share options further.

This is all a shame because the top cats are ruining what was a pretty good incentive for the common Joes.

For what its worth, returing to thread, élan shares are a steal, easy 20% gains being made week on week/day by day for the last 2 weeks

528i

They're a steal now after this mornings 50% drop to €2.90

Shares in Athlone-based pharmaceutical firm Elan have fallen in value by more than 50% on the Irish stock exchange this morning.

The drop comes after the company discovered a third case of PML in a patient treated with its multiple sclerosis drug Tysabri.

The patient, who died in December 2003, was originally believed to have died of a form of brain cancer.

Elan share price was down to €2.90 after a €2.60 drop this morning.

http://breaking.tcm.ie/2005/03/31/story195964.html
buy buy buy

FX Meister

bounty wrote:

im tempted to buy elan shares

where do you guys get stock info, forums or info sites?

try www.goodbody.ie for the quotes, you can buy the shares in your local AIB branch

lomb

http://www.keralanext.com/news/indexread.asp?id=169484

yep looks like even in single therapy without the other biogen drug, tysabri is dead as it killed someone who was using it alone. http://www.thestreet.com/_googlen/stocks/robertsteyer/10215550.html?cm_ven=GOOGLEN&cm_cat=FREE&cm_ite=NA

looks like its time to dump elan and salvage whatever u can, or hang in there
Absent Tysabri, we believe Elan effectively belongs to its debt holders," says Alex Hittle, of A.G. Edwards, in a March 31 report when he cut his rating to sell from hold. Elan, which has undergone a dramatic restructuring in recent years, has $1.6 billion in cash and $2.3 billion in debt, including $1.1 billion in debt due in 2008, Hittle says. He doesn't own shares and his firm doesn't have an investment banking relationship.

Biogen Idec and Elan pulled Tysabri from the market after receiving a report of one death linked to a patient who had taken the drug during clinical trials. A second case of the rare disease was confirmed later.

Both of these patients took Tysabri for more than 24 months in conjunction with Avonex, an MS drug made by Biogen Idec.

At the time, the companies pointed out that there had been no cases of this rare disease in patients who took only Tysabri or only Avonex, or in patients receiving Tysabri in clinical trials for Crohn's disease, a debilitating gastrointestinal ailment, or rheumatoid arthritis.

Even though Biogen Idec didn't comment on a predicted return of Tysabri to the market, the chief executive of Elan, Kelly Martin, said on Feb. 28 that "a realistic time line" for Tysabri's resurrection would have been during the third quarter of this year.

That prediction is now unrealistic.
Checking Patients
The latest case of the rare central nervous system disease, known by the initials PML, was detected in a patient who took Tysabri only during a Crohn's disease clinical trial.

The companies said Wednesday that the third patient, who died in December 2003, previously had been diagnosed as having malignant astrocytoma, a type of brain cancer, rather than PML, or progressive multifocal leukoencphalopathy. The original diagnosis was made in July 2003.