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  • Minn_sea Minn_sea Mar 3, 2005 9:47 AM Flag

    Creester and DMK


    NOT A LECTURE: I too lost a great deal in the ELAN fall. Probably 15% of my holdings. But, diversafication preserved my other 85%.

    This is a lession you can only learn by experiencing it. You will never forget such lessions when you have actual assets on the table.

    You cant learn this at Harvard business school. Although, Menachem and I both lectured you about diversification, experience is the only real teacher. Good luck and a better tomorrow. You will be better armed with this experience.


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    • Minn_Sea: Ouch! That feels a little bit like a lecture (g). But I respect you, and I accept lectures from people I respect.

      MY INVESTMENT HISTORY- I can remember when Celgene went from $75 to $11, when I had all of my eggs in that particular basket. Then it recovered to the mid-high $50's.

      Then I converted my Celgene $$ to Elan (at single digit prices, which is where ELN has fallen back to now- a year later).

      Therefore, my net worth is now more or less equal to what it would have been, if I had kept all my Celgene shares a year ago. Interesting (and painful).

      Looking back to when I first bought Celgene (in late 1997), I would have been in a LOT worse shape today had I NOT followed my "eggs in one basket" strategy. A LOT worse. My net worth is now several times more than what it was in late-1977 (although obviously a lot lower than it was last week).

      I'm not sure what the Harvard Business School would say, nor do I really care, about this particular "case study".

      Diversification is a little like motherhood- it's hard to speak against it.

      But anyone who wants to make real money in the stock market will never do so being diversified. It's risky, and often painfullly so, to be over-concentrated. A little like life in the big city, I guess.

      A final point- would you care to make a wager as to where Elan will be in 12 months?

      My bet is that it will follow Celgene's lead, and recover substantially if not compeltely to where it was last week (over $20).

      Why do I think this?


      • 2 Replies to atmouse99
      • Mouse, great post. (I read them backward.) Options and margin were why I had to liquidate a good bit of my portfolio to hold on. I am so damn greatful that I had decided to always hold a "substantial" cushion in margin. Who would have guessed it could get this bad? I figured $10 A SHARE cushion was very conservative. (LOL) But shares are intact and I am hoping we come back pretty substantially by year end.

        Because I predict that the following things will happen:

        1- Patients #1 and #2 will turn out with some combination of (a) misdiagnosis with PML and (b) suffering from multiple ailments, and being treated with steroids and/or other medicines, in addition to Tysabri. [Kelly and Lars hinted as much on Monday's CC.]

        Doctors will understand this to be a typical new drug "panic" attack (how many times has a similar thing happened to Celgene, and passed away, over time?), and will be just as willing/eager to prescribe Tysabri for MS as they were last week. Ditto for patients. [neuro1111 has said as much here, more than once.]

        2- Elan/Biogen will quickly examine all existing MRI's of all the AFFIRM trial patients, and find NO cases of PML. [someone pointed out here that the most recent AFFIRM patient MRI's are quite recent- the trial concluded in November.]

        3- The FDA will learn about the good (for Tysabri) results of points 1 and 2 fairly quickly, and my HOPE is that there will be a quick agreement that all patients previously taking Tysabri will be allowed to resume taking it immediately, under a sort of "compassionate use" regime, provided that they first take a physical and have a new MRI. [this may well turn out to be wishful thinking, but it IS clear that the FDA still thinks very highly of Tysabri.]

        4- The thing that is likely to take the most time is that ALL clinical patients will probably be required to have a new physical exam, and a new MRI, and the results will have to be presented to the FDA before Tysabri is re-introduced generally on the market. This will probably take until Q3, as Kelly said on the CC. My prediction is that the results of the physicals and new MRI's will exonerate Tysabri.

        3- In the end (this summer/fall, as Kelly predicted on the CC), Tysabri will be exonerated and put back on the market, with a strengthened label (which, ironically, among other things, will warn against dual therapy with interferons, and therefore help Tysabri in the long run).

        4- Obviously the several month forced marketing hiatus will hurt Elan, but I think they have more than enough cash (and contingency plans, as Kelly said on the CC) to weather this storm.

        5- I wonder/worry about a hostile takeover, but it seems to me that the standstill agreement(s) will protect them here.

        END OF PART 2