Feuerstein's Biotech-Stock Mailbag: Elan

(Editor's note: Come see Adam Feuerstein at the Money Show in San Francisco. Adam will be speaking to attendees on Friday, Aug. 8, at 2:15 p.m. ("Biotech Investing for Individuals: How to Turn Geeky Science Into Fat Profits"); on a lunch panel on Saturday, Aug. 9, at 12:35 p.m. ("Tech and Biotech: Picks and Pans for 2008 and Beyond"); and on Sunday, Aug. 10, at 8 a.m. ("Biotech Investing for Individuals: How to Turn Geeky Science Into Fat Profits").

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What a crazy week! The Biotech Mailbag is brimming with email, so let's get to it.

The big story, of course, was the meltdown of Elan(ELN) Wednesday after its Alzheimer's drug fell flat on its face at the International Conference on Alzheimer's Disease meeting in Chicago.

I've been a vocal skeptic of Elan and its Alzheimer's drug bapineuzumab this year, a bearish position that hasn't always been a comfortable one to take. Needless to say, I felt vindicated and it was nice to receive a bunch of emails acknowledging my work.

"You were right on target. Props," wrote Charles B.

From Vince M.: "Congrats on the Elan call. You were right."

I even heard from an Elaniac, a guy known only as snugpharma. "Today, you win. In the future, well, in this chastened mood, I am not really up for the fight at this time."

Enough back-slapping. Most of the email I received on Elan this week was from readers who want to know what happens next, like Gerry W., who wrote:

"Hey Adam, the Elan column was a great read. I'm wondering, however, what happens to the company and the stock now that the [ICAD] conference is over?"

Gerry's email arrived before Thursday's night bombshell, when Biogen Idec(BIIB) and Elan disclosed in a regulatory filing two new cases of a serious and often deadly brain infection in multiple sclerosis patients being treated with Tysabri. In fact, I wrote this entire column before the Tysabri news hit the wires.

In version one of this week's Mailbag, written with the sun high on a hot and humid Thursday afternoon, I intended to tell Gerry that Elan was in a real bind because of bapineuzumab. It's late Thursday night, dark but still hot and humid, as I rework Mailbag version No. 2 to reflect the Tysabri situation.

Needless to say, Elan's outlook doesn't look any brighter.

Is there any compelling reason to own Elan now? Bapineuzumab looks like a crapshoot at best, and news flow around the program goes dark as the phase III studies enroll patients and we wait two years for data. Many bulls were hoping for an early or accelerated approval filing. Please, the bapineuzumab data are so weak, that rosy scenario is now pure fantasy.