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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 theGerry'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.
ICADconference is over?"
"I don't understand how Kelly Martin could be so bullish on bapineuzumab based on this data. Did he mislead us all?"Kelly Martin, Elan's CEO, has a BIG credibility problem with Wall Street. Without naming names, let's just say that I saw a couple of Elan's largest institutional shareholders at the ICAD conference Tuesday night, and they looked like they wanted to take Martin into an alley and, well, you get the idea. In an interview with CNBC Wednesday morning, Martin tried to blame Elan's selloff on too-high expectations and investors who want simple answers to complex questions. That's laughable. It was Martin, himself, who set those high expectations for bapineuzumab, and the data aren't difficult at all to understand. And it's Martin who fostered an arrogant, insular culture at Elan where friends were rewarded and anyone who dared question the company was frozen out. Now he wants to blame investors for the bapineuzumab fiasco? How lame. And now, Martin has an even bigger problem on his hands because few investors will give him the benefit of the doubt when he tries to soothe investor nerves about Tysabri.
Moving on. It was also a great week because Vanda Pharmaceuticals ( VNDA) received a non-approvable letter for its schizophrenia drug Fanapta -- another prediction of mine in the win column. The Vanda news prompted Steve P. to write:
"The world, as we know, is coming to an end if a straightforward rational assessment of clinical trial data actually results in a logical, predictable response by the FDA. Congrats -- I am just amazed that there seems to be so much surprise by those who ought to know better."I couldn't agree more, and I love Steve's snark. There are people out there doing the real work who get stuff like predicting the Food and Drug Administration's takedown of Vanda correct. I'm fortunate to know one of those guys because he makes me look smarter than I am. Go back to my January column on Vanda. My source, a hedge fund analyst, said that FDA would issue a non-approvable letter based on his analysis of the company's clinical trial data. He nailed it cold.
Lastly, an email from David K., who asks: "Who is the best CEO in the pharmaceutical industry?" I don't follow Big Pharma all that closely, so I hope David doesn't mind if I tweak his question towards biotech CEOs. Genentech's ( DNA) Art Levinson has to be in the top tier, as does Gilead Sciences' ( GILD) John Martin. Myriad Genetics ( MYGN) isn't a pure biotech, but the way CEO Peter Meldrum managed to get $100 million from Lundbeck for a failed Alzheimer's drug that actually pushed his stock higher puts him in the genius category. BioMarin's ( BMRN) J.J. Bienaime has done a marvelous job turning around that company into one of the best-performing mid-cap stocks in the sector. This isn't an exhaustive list, so let me turn the question around to all of you. Send me your pick for the best CEO in biotech. At the end of the year, I'll pick a winner and we'll celebrate his (or her) greatness right here. And remember, I'm still seeking nominations for worst biotech CEO of the year. Elan's Martin appears to be making a strong run now, but who else do you think deserves the ignominy?
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