Research Report Highlights Reality of Tysabri’s Prospects (ELN, BIIB)

I can almost hear the echoes of the punching of keys by exacerbated Tysabri bulls frantically typing opinions to post on the message boards rebuffing and rationalizing the survey released today by Piper Jaffray.

The survey conducted on 140 neurologists found that only 59% believed Tysabri should return to the market and that only 6% would use Tysabari as first-line therapy. The results were not all bad, however – 92% believe the drug could be useful therapy to patients and 57% believe the effectiveness is worth the risk of PML.

But bulls need not worry. Despite the tepid survey results, Piper is still supporting the levity in the stock. Piper believes Tysabri is worth $9 per share to Elan (ticker: ELN). If you are wondering what that means in terms of market value, Piper believes Tysabri is worth over $4 billion to Elan, implying Tysabri is worth a total of over $8 billion to both Elan and Biogen Idec (ticker: BIIB)! If you have the unrelenting urge to drink the Kool-Aid, do so at your own peril. By my calculations, to justify that kind of net present value, Tysabri will have to generate peak annual revenues of over $6 billion, more than the sales off all current prescription drugs for Multiple Sclerosis combined.

Don’t get me wrong, I believe there is a good probability that Tysabri returns to market; albeit in a limited capacity. The expectations implied by the current stock price, however, are already pricing in a best case scenario.

Comments

[UserThunder...:]

I love these obscure pieces.

Mar 16 05:54 PM