Drug stocks can be volatile. Chart squiggles will rise
and fall on unpredictable events like
FDA approvals, fresh Phase 3 trial data, or sudden
outbreaks of deadly drug reactions. But Mr. Market eventually
takes his Valium and settles down. That's the case with
Motley Fool
Rule Breakersrecommendation and drug developer
Elan (NYSE: ELN) nowadays.
Elan gets more than half its revenue from the field of
multiple sclerosis, through the powerful but risky MS
medication
Tysabrithat it markets alongside American partner
Biogen Idec (Nasdaq: BIIB). Back in 2005, the
newly FDA-approved Tysabri was linked to several cases of the
often fatal brain infection progressive multifocal
leukoencephalopathy (PML). The drug was pulled, and Elan's
stock dropped like a rock.
I've had a longstanding interest in MS because of family
friends who have long suffered from the disease. Traditional
therapies like
Teva Pharmaceutical Industries '(NYSE: TEV)
Copaxone and Rebif from
Pfizer (NYSE: PFE) and EMD Serono typically
slow the disease down, but Tysabri can actually reverse
symptoms for some patients. Unless PML turned out to be a
common side effect, Tysabri's rewards outweighed the risks,
and its return to market seemed almost certain. So that's
when I bought my first batch of Elan shares.Â
And it's been a rocky ride ever since. Elan's stock has
melted down to $3 and change, and then soared to $35. The PML
cases have been dropping in regularly since Tysabri returned
to market, but investors don't spook as easily anymore:
PML Report Date
Elan Change
Biogen Change
July 31, 2008
(50.5%)
(28.3%)
Oct. 29, 2008
(11.1%)
(3.9%)
Dec. 15, 2008
(3.6%)
6.4%
Feb. 6, 2009
4.3%
(0.6%)
April 17, 2009
(6.2%)
(3.5%)
May 22, 2009
(0.4%)
1.7%
June 12, 2009
(6.9%) Continued... |