on february 28th, elan and biogen idec pulled tysabri from sales and clinical trials. 2 patients who had been taking a combination of avonex and tysabri (avonex is an ms treatment by biogen) developed PML, a rare disease that causes destruction of brain tissue. since then, i've been dilligently following the developments as the two companies review the drug for a possible reintroduction to the market.

my opinion is that the situation is greatly misunderstood by investors because of prejudiced coverage by the media and institutions. the purpose of this post is to put into perspective what has happened and for me to provide commentary to help you understand what is really going on.

PML CASE #3
during the sgcowen health conference in mid-march, ceo kelly martin estimated that reviews would be completed by "the end of summer." at this time, the stock was trading around $7. on march 31st though, the stock tumbled from ~$7 to ~$3 overnight (taking me down with it). a 3rd confirmed case of PML was announced by the 2 companies. the 3rd patient was diagnosed with pml post-mortem (he died in 2003). the 3rd pml case had been on tysabri monotherapy in contrast to the first 2 pml cases who were on combination therapy (avonex+tysabri).
the significance of patient 3 is that s/he was discovered to have been on other immunosuppressive drugs.

[EDIT: patient 3 apparently had a history of treatments with steroids, remicade, and imuran (used in patients of organ transplants to lower the immune response so that the body does not reject the organ, ie an IMMUNOSUPPRESSANT). please refer to ThisIsMs for a full discussion on the effects of each drug]

the key fact to keep in mind is that PML is already known to arise in immunosuppressed patients. since there have been no confirmed cases in tysabri monotherapy (cases 4 and 5 are unconfirmed), it can be speculated that combo therapy could be the culprit.

ELAN AGM
elan's AGM, which took place at the end of may, was very upbeat. kelly martin stated that it was a matter of "when, not if" tysabri would find a path back to ms patients. i listened to this AGM webcast live and believe me, it inspired a lot of confidence and excitement in my investment w/ elan. if you're new to elan, you should definitely listen in to the recorded AGM.
the important thing to get from the AGM is that it was the last time that ELN officially briefed investors on tysabri. outlook on tysabri has been pretty grim lately, but keep in mind that nothing has officially changed. things brings us to PML "cases" 4 and 5.

PML "CASES" 4 and 5
a few weeks after ELN's successful AGM, and 1 day suspiciously before BIIB's AGM, jeff krasner of the boston globe published a frontpage article which bore the headline: "A fourth death may be tied to Biogen's MS drug." this article alone caused eln stock to plunge from ~$8 to as low as $6.10 the next day. elan's PPS has yet to recover from the damage done by this article. shouldn't someone be held responsible for the losses sustained by shareholders like me?
this "case" has since been rejected by biogen over a CC. in fact, there exists an article saying that the patient referred to as the '4th case' was shopping when she found out that she had "died." considering its been over a month since this report, we can assume that this case is not valid since ELN and BIIB would have been required by the SEC to report it officially. the same can be said about the '5th case' which was brought up by the WSJ (i dont have a subscription to read about it). so, in other words, there have been 3 confirmed cases of PML so far. 2 are combination therapy patients and the other is a monotherapy but immunosuppressed patient.

SALE OF BIOGEN'S OCEANSIDE PLANT
biogen recently sold its drug manufacturing plant in oceanside, ca to genentech. a lot of critics claimed that revealed biogen's lack of faith in tysabri return (oceanside was slated to produce tysabri). however, it is important to point out that biib has also developed a high titer method of manufacturing tysabri, meaning a higher production capacity for the drug. also keep in mind that the oceanside plant was part of biogens acquisition of idec.

SIGNS OF A COMPANY IN TROUBLE?
awhile ago, eln's chairman of the board, kyran [edited for spelling] mclaughlin, purchased 90K shares of eln. investors approved of a sharebuyback program during the AGM. eln posted very positive crohn's trial results a few weeks ago. eln will post breakeven EBITDA even without tysabri in its pipeline. eln has a very promising drug for alzheimers in phase2 that can be a even greater blockbuster drug than tysabri. eln is retiring some of its 1billion dollar debt that is due in 2008. elan's nanotech is starting to take off. the new england journal of medicine is considering the possibility of tysabri's return from a scientific standpoint.
are these signs of a company in trouble? with the exception of NCB and a few other brokerages, everyone seems to love to hate elan. but hey, at least now they're actualy considering that tysabri will back. a few months ago, pretty much every analyst on wallst claimed that there was no chance tysabri would ever return.

WRAP UP
this is a great drug with great potential. for now, all signs point to tysabri monotherapy. as avonex combo therapy becomes singaled out as the culprit, and as avonex goes generic, biogen and elan will have to share tysabri as their sole flagship MS drug. the patient reviews should be finished any week now, and a risk/benefit profile revised by the fda. the speculated timeframes for the completion of reviews range from as early as Q3 2005 to as late as Q1 2006. kelly martin and jim mullen seem to continue to stand by their "end of summer" timeframe.

if you'd like to read about tysabri/pml from a very scientific and medical standpoint, go over to the yahoo msg boards and search for posts by 'pinvestment' and 'neuro1111' [edited for spelling], both very well-versed scientists who graciously share their knowledge on the situation. during the writing of this post, i found the tixx webpage to be very helpful. they have a lot of cool documents on the site too. check out their site if you'd like to continue researching elan.

good luck betting on tysabri. thanks for reading.

DISCLAIMER: I hold long positions in ELN, so my discussion may be inherently biased.

My last post was regarding short-term investments. This time I wanted to touch on a long-term investment I’ve been recently researching, Starbucks. This coffee empire is a company I see as undervalued with an almost unlimited potential for growth. Starbuck’s has had a historic routine of overperformance, yet this has resulted in very high expectations for the company. As a result, investors have constantly come to expect these same sort of results from the company which can sour even perfectly decent reports. Last winter, the stock went as high as $64, but has since dropped due to these expectations. But let’s take a look at the facts. Within the last decade, the stock has split four times and I believe another one is way overdue.

Barring the newest ads regarding their doubleshot espressos and frappucinos, how many of you have actually seen a Starbuck’s ad? They manage to save millions on advertisement, as they choose to invest this money in employee training instead. Listed as a fast-food company by the Fortune 500, they have one of the most comprehensive employee training programs available, creating a high-quality product for their consumers.

As well, the company has an excellent business sense, catering to both their employees and their customers. Currently, there are 6000 stores within the US, but by the year 2010, they hope to expand to over 20,000 stores. People joke about seeing a Starbuck’s on every block, but this is no coincidence. The reason for these expansions is due to the high demand for Starbuck’s coffee. They like to call themselves a “coffee company serving people,” but they do much more.

Real estate is a major part of their success. Oftentimes, Starbucks occupy the busiest corners on the street which allow for maximum exposure. Just by building a store on a corner drives up the price of the property and the immediate area surrounding it. If the owners were to sell just their properties alone, they could probably retire.

The company has partnerships with many large names, such as Albertson’s and Barnes & Nobles, not to mention their own line of products. They have their own ice cream, which has become the top selling brand of coffee ice cream in the nation. They just recently bought their own music company, “Hear Music,” in 1999 so they could package their own cd’s. That music you hear in the store, they own it. Starbuck’s has even launched its own credit card, the Starbuck’s Duetto Visa.

With plans to open on the Nikkei Index, I believe Starbuck’s has a bright future ahead and long-term investors would be well advised to take advantage of this stock. That’s all I’ve got for now so good luck and happy trading.

everyones talking about realestate right now and the media's constant hyping of flipping properties, imho, is helping to artificially inflate the entire sector.

the existance of a realestate bubble is a controversial topic right now. as greenspan continues to raise interest rates and slow the economy, how are americans supposed to afford houses as interest on lending inevitable increases? i was doing some research on realestate related stocks and REITs and i found something interesting.

TOL, Toll Brothers, a builder, claims that the real estate bubble is nonexistant. yet, i came across a piece of interesting info in nasdaq trader's blog. apparently, the management and owners have been selling million dollars of their stocks. i wonder why…. i have no idea whats going to happen b/c i dont understand the sector well enough, but it will be interesting to see what happens.