Ken Kam's Best Ideas Blog

Factors That Can Drive A Double

When I first recommended Elan Corporation (nyse: ELN) in an Advisor Soapbox at Forbes.com on June 17th, the stock was trading below $7 and I said the main issue that would determine whether it would double is, "Will Tysabri Be Back?" Since then the stock has doubled.

Based on Marketocracy’s collaborative research process, I believe ELN could double again in the next 2 years.

The issue that will drive the next double is, "How Profitable Will Tysabri Be?"

Wall Street does not expect Tysabri to be a strong competitor to existing drugs. Based on the feedback we've received from MS patients, Wall Street is in for a big surprise.

Tysabri has to win over just 18,000 MS patients to generate $500 million in revenues. In the next 12 months, we think Tysabri could surpass Wall Street's estimates for peak sales in 2012.

Looking For Nuggets: The Rest of the Company

Elan is not a one trick pony. In addition to Tysabri, Elan has:

• 3 drugs already on the market: Maxipime, Azactam, and Prialt
• A research program to develop drugs for Alzheimer’s Disease in partnership with Wyeth
• Drug Delivery Technlogy: The Hidden Gem

Although ELN is highly dependent on Tysabri in the near-term, there is significant value in the rest of the company and at least one opportunity that could be as big (or bigger) than Tysabri in the longer-term.

Other Issues

Management Credibility
Competitors Hitting Below The Belt

Summary

ELN has doubled since we first wrote about it in June 2005 and we think it could easily double again within the next year or two. Additional research into the profitability potential of Tysabri looks like it could yield another double from Tysabri alone. Elan’s drug delivery technology needs more collaborative research but it looks like it could be the springboard to make Elan a major player in the pharmaceutical industry.

Previous Articles/Reports/Alerts by Marketocracy on Élan

Marketocracy Alert: Élan 7/24/06 (click here to read)
Marketocracy Alert: Élan 6/5/06 (click here to read)
Marketocracy Alert: Élan 3/8/06 (click here to read)
Marketocracy Alert: Élan 2/28/06 (click here to read)
Marketocracy Alert: Élan 1/23/06 (click here to read)
Marketocracy Alert: Élan 1/04/06 (click here to read)
Marketocracy Report: Élan 12/16/05 (click here to read)
Élan on track for a Double - 12/01/05 (click here to read)
Monotherapy will Double Élan's - Forbes 9/28/05 (click here to read)
Betting On Élan's Second Resurrection - Forbes 6/17/05 (click here to read)