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Biogen Inc. Message Board

  • thefourthhorsemanoftheapocalypse thefourthhorsemanoftheapocalypse Jan 2, 2004 2:33 PM Flag

    Eln vs BIIB

    Correct me if I am wrong, but this 50/50 split of Antegren is not a 50/50 split in cash.
    If I am correct the 50/50 split goes like this: BIIB gets 100% of the profit from inidcations for MS. ELN gets 100% of the profit from indications for Crohn's.
    Happy New Year

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    • LJD,

      Excellent posts and, I think, pretty close to the mark. I know the Elan story pretty well and for all of those Biogen/IDEC investors who don't, LJD's last two posts are right on target. Also, remember KPMG has ridden with Elan all the way over the past few (rocky) years. Given the political/accting environment I would think they must be very confident that all will resolve favorably. Otherwise, forget about the KPMG partners, the Dublin office and the reputations of those KPMG partners involved in NYC and, likely, London.


    • [continued from last post]

      As you may know, Elan resolved any differences with the SEC�s Division of Corporation Finance and the SEC�s Office of the Chief Accountant in September 2003, with a net two cent per share restatement for the two year period 2001/2002. [I see a pattern here, with these two cent per share restatements.] With these fairly minor accounting differences resolved, with new management in place, with the dissolution of most of the joint ventures that had been criticized by many but are common in the pharmaceutical industry, with the elimination of the two �risk sharing entities� (where Elan had sold forward rights to a percentage of some future net income on certain products in exchange for upfront payment of certain research costs), and with the elimination of one of the two �special purpose entities� (the EPILs), it is difficult for me to see the SEC coming down on Elan with a crippling fine. If the SEC indeed goes away with a benign result or even a couple of million dollar fine but with no admission of wrongdoing (which has been the model in many of these cases), I think it is likely that the class action cases (filed after the WSJ article by opportunistic class action firms who are supposedly protecting my interests as a shareholder) will go away. I know what must be shown to survive a motion to dismiss in a securities fraud class action following the PSLRA of 1995, and the attorneys will not be able to demonstrate the requisite scienter.

      One other point about the SEC investigation: Following the July 2002 management shakeup, as you know, Elan retained the former Chairman/CEO (Geaney) and the former CFO (Lynch) on its payroll for two years (through this coming summer), to assist the company in making its balance sheet more transparent. These two men have been cooperating with the SEC investigation. Just think if WorldCom, Enron, Adelphi, Tyco or some of the other companies with corrupt management had kept their former top officers on the payroll to wrap things up for two years. My conclusion is that the SEC is going to go away; unfortunately, this is a low priority matter given everything else on their plate, and it keeps dragging on. Perhaps the SEC has told Elan management that it has to clean up its complicated balance sheet as a condition to the investigation being resolved, and the company is now wrapping up an 18 month effort.

      Also, as you are certainly aware, Elan had a secondary offering and a convertible debt offering in November 2003, for roughly $650 million or so (I didn�t look it up, so I may be off a few million). This money was invested by institutions, and you can bet they did their due diligence before wiring those funds.

      Finally, you should be aware of the significant insider buying at Elan over the past two years, since the share price collapsed, nearly $8 million worth of stock bought on the open market by senior management and some members of the board. If they had any indication that the SEC was going to come down hard, I doubt they would have spent their own funds buying Elan shares. These purchases are not widely reported in the US, as they are not filed with the SEC (not required for foreign companies), but are required by the London and Dublin stock exchanges. If anyone is interested, I can post a list with links for confirmation. BIIB should do well, but I think ELN will do great as the cloud of negative public perception over the past two years clears away so investors can see the pipeline and what the new management has accomplished.

    • "Correct me if I am wrong, but this 50/50 split of Antegren is not a 50/50 split in cash. If I am correct the 50/50 split goes like this: BIIB gets 100% of the profit from inidcations for MS. ELN gets 100% of the profit from indications for Crohn's."

      You are wrong. It is 50/50 of net profits for these and any future indications, so they share costs and revenue. To the extent BIIB does the manufacturing and the sales for MS, it will be reimbursed for those expenses, just as ELN will be reimbursed for its expenses, either for Crohn's Disease, MS, or any other indications.

      You should expect the companies to announce an Antegren Phase II IND (as safety is well established) for rheumatoid arthritis sometime this year. 50/50 split of costs and revenue, of course.

    • been following bgen, idec, now biib for several years, bought in bgen 5/00 and doubled up 12/03. Am rr and ia. Jmho, butt the ant hill is looking pretty good. Would sell calls on a quick run up to low 50s, very willling to hold very long term with merger benefits coming in 06 and 07.

    • Arch,

      If you're interested in the other serious names I follow, look at post 25514 (I think) on this board. It is labeled "benchmarking," and is an assessment of last year's results, and this year's holdings. The major adjustment I've made so far is to jack IBIS up to being about even with KO. You'll see I've done better in timing some stocks than others, which is just the way it goes. Here I've been mostly building since Spring of '02, but have done some trading around the edges.

      Luck to you!

    • Looks good too. failed 5th wave in SEP ended 5 year Elliott pattern. Problem is current 5w projects to end at 38. Should be able to enter on correction at 33 or better.

      Good luck to you and thanks for sharing your picks.

    • Intermediate trend is up now but could be just a C wave in a w2 countertrend. If so, longer term risk is great.

    • I love its chart. Recent low completed 5 year Elliott pattern!

    • Yow. Talk about an underperformer. I've been collecting pharmas (NVS, PFE, MRK, JNJ, SGP, SRA, BMY, and a couple others that slip my mind for now) - I should give ENZN another look. So far, every time I have, I've passed! But at some point most stocks become a buy, at least momentarily.

      BIIB broke 40 like it wasn't even there. That's very positive. Next resistance should be ~ 42 or so.

    • ENZN's high level trend has finally turned northward.

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