Cowen's "Elan" for Elan Corp.

At the risk of being ganged up on by the "Elanians" who will take umbrage with the fact that the biopharma team at Cowen and Company is not initiating coverage of the Irish drugmaker with a "screaming buy," I am blogging about the analysts' 50-page call on the stock yesterday.

In a bear market, shares of Elan (ELN) are up a whopping 37 percent over the past month since it and partner Wyeth (WYE) announced the basic results of the mid-stage test on their promising Alzheimer's drug. Researchers will get into the nitty-gritty data at the big Alzheimer's conference the end of this month in Chicago. We will be there and yes, dear Elanians, we have requested a live interview with CEO Kelly Martin, but have not received an answer yet.

Anyway, because of the recent run-up in the stock, the Cowen analysts say, "The current valuation implies bap (shorthand for the name of the Alzheimer's drug) sales of $7-$8 billion in 2015. This ultimately may prove conservative, but with minimal topline (the basic clinical trial data released so far) Phase 2 results in-hand and Phase 3 data 2-plus years away, we believe ELN shares have limited near-term upside potential. Therefore, we are initiating coverage of Elan with a Neutral investment rating." Their estimate of peak bap sales actually goes as high as $12 billion in the 2015-2020 timeframe. That's Lipitor money.

Cowen says bap could be a game-changer and the first disease modifying treatment for Alzheimer's, but that it's "too early to draw that conclusion based on the very limited" data available. The analysts believe the detailed test results that will come out in Chicago on Tuesday, July 29th, will be stock-moving. If everything continues to look good, Cowen says WYE and ELN could file for Food and Drug Administration approval of bap as early as December of 2009 and get the green light and launch the drug, under a best-case scenario, by the second half of 2010.

Normally I only print disclosures when they exist, but since this is a big coverage initiation I'm making an exception to my own rule to mention that there are no disclosures listed in the Cowen note.