Macro Tsimmis

intelligently hedged investment

Élan (ELN) update #6

Posted by intelledgement on Thu, 13 Dec 07

After the close yesterday, our multiple sclerosis (and hopefully soon, Crohn’s disease) drug maker’s marketing partner for tysabri, Biogen Idec (BIIB), announced that no one wanted to buy them, afterall—they had been soliciting takeover offers in recent weeks—and today ELN closed down 7% in heavy trading.

Why? Because there is a clause in Élan’s agreement with BIIB that allows them to take back the tysabri marketing rights at a bargain price if there is a change in control of Biogen Idec. Folks were imagining at the least that ELN management might be able to negotiate an improved deal with any successful bidder. Now that apparently won’t happen.

This is only marginally news but having your investment clipped by 7% in one day due to something that has almost nothing to do with your company’s real business is so emblematic of what we speculators have to put up with that it is worth attending.

Look at the bright side…it could have been worse…BIIB stock was down 24% today! LOL

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