The ups and downs of Elan

Right on the heels of good Tysabri news comes another PML case.

A little background -- Tysabri was pulled from the market in 2005 after just a couple months. 3 patients from the clinical trials developed PML -- which is a usually fatal infection in the brain caused by the JC virus. Somewhere around 80%+ of us have the JC virus dormant in our system, yet our immune system usually prevents it from penetrating the blood-brain barrier.

Of those 3 patients, it was eventually determined that one probably had had MS misdiagnosed, and the other two were in Avonex/Tysabri combined trials. Further, the misdiagnosed patient and one of the two combo therapy patients had had prior doses of MS drugs which weaken the immune system dealing with the blood-brain barrier. (Further background -- Elan's marketing partner, Biogen, happened to be the maker of Avonex and pushed the combo therapy trials in the US).

Tysabri is about twice as effective as the next best therapy at keeping MS patients from having relapses. The patients basically stormed the FDA and made it clear they were willing to take the PML risk to keep Tysabri -- see some of the quotes at the end of this post!
In August of 2006 theFDA voted to allow Tysabri back on the market, with VERY stringent protocols (called the TOUCH system) designed to keep patients who had used certain immuno-suppressing drugs previously, off Tysabri until those drugs had been washed out of the system.

The label on Tysabri says that the risk of PML is 1 in 1000. As of June 2008, about 31,000 patients were on it in non-trial prescriptions. In July, 2008, 2 patients in Europe were disclosed to have PML. Elan promptly cratered from $21ish to around $9.

Those two patients, however, are still alive. One is doing quite well and is home; the other not so well and in the hospital still. That one, had had prior immuno-suppressing drugs also though -- Europe was not bound by the TOUCH protocols. There is a new therapy for PML called plasma exchange (plex) that strips the Tysabri out of the body very quickly, which allows the immune system to ramp up immediately against the JC virus.

So now we have a third post-re-entry case -- Elan fell in after hours trading from $7ish to $5.50.
It appears this patient was in monotherapy too -- which actually bodes well for recovery. We now have 5 MS patients who developed PML -- 2 on mono and 3 on combo. This is out of nearly 40,000 total users -- 35,500 after the 3rd quarter results and 4,000 in the prior trials and marketed in 2005. Unless another 30 people develop PML in the next quarter, the risk is MUCH lower than 1:1000 -- and PML is no longer a near-certain death sentence.

Tysabri, at the forward one-year run rate, JUST became a blockbuster ($1B in sales). This case may dampen some demand, but the growth of new patients is still happening. Both companies agree they will have 100K patients on therapy by 2010, even counting in PML risk and dropouts. If acheived, that would lead Elan to a share price of $18 - 25 within 2 years.

That allows for no potential in the rest of the pipeline - and you heard it here -- we have AAB-001 in Phase III that will affect a subpopulation of Alzheimer's patients better than Aricept. We should learn more about that late next year of 2010 also -- and THAT would be a game changer with sales potential in the tens of billions.

Reagrds,
Trond

Tysabri quotes

Quotes and snippets regarding MS patients about Tysabri. These come from editorials, a bulletin board from the National MS Foundation, and from online MS bulletin boards.

Some of the quotes are in bold. These are my emphasis. [Trond]

My sister has had MS for over 2 decades. She has slowly gotten to the point where she is 100% bed ridden and needs a catheter. She can't even sit in a wheelchair any longer.She took TY 3 times and it was a miracle. I witnessed her walking on her own out to her mail box some 75 yards from her house. She could cook, eat on her own, use the bathroom ALONE for the first time in years. She had regained her life, her dignity, her future.

Bartira Tibertius of Chicago … received Tysabri for a full 28 months as part of a clinical trial. "I was doing great. I even forgot that I was sick," Ms. Tibertius, a language teacher and translator, tells us. "But now I'm getting very, very scared. It's deteriorating and I know that," describing numbness and tingling in her hands, arms, feet and face. As for any possible risks from the drug, she says, "I'm more scared of not having Tysabri than having Tysabri. If you told me the Tysabri would shorten 10 years of my life I would do it. I want quality of life, not quantity.">>

Talked to my sister this AM about the Avonex story. Here's her reply & I quote; "How many relapses did I had when I took Avonex? I won't take that crap ever again. I want to go back on Tysabri." End of quote. Avonex is toast.

I was in my neurologist’s office for an appointment late last winter and there were these people there, laughing, acting, and looking as if there wasn’t a care in the world. I thought it was a little odd. Why were they there? There didn’t look sick. During my appointment, my doctor told me that they were in the Tysabri study and had come in for their treatment. I had to stop the interferon because of liver complications. I had to stop the chemotherapy because of heart complications. I now have to take daily injections of Copaxone, since we were out of choices, and the MS is progressing, my doctor suggested Tysabri. It WAS my only choice. I was waiting for our insurance company’s approval the morning I heard it was being suspended. I was looking forward to a monthly treatment instead of daily injections that have unpleasant and painful side effects. I was looking forward to something that might offer more promise in managing this disease. I was looking forward to a treatment that offered hope that I might be able to return to some type of gainful employment. I went on Social Security Disability a few months later. I ended up with worsening symptoms on top of having to manage daily injection site reactions. The MS may have progressed any way, but who knows, it might not have. I sure would have liked a shot at it!

I was diagnosed with MS on April 10, 1996 (our Anniversary). At that time I experienced numbness in both of my feet. After both an MRI and a spinal tap my neurologist was able to confirm my condition. This was not what we wanted to hear but I was prepared to fight with all that was within me. Since that time my condition has progressed. It has affected my vision, my mobility (I struggle to walk with a walker now), my thought process, my speech, I now am incontinent, and am very tired most of the time. My quality of life is not good. My numbness is to my knees in both legs and is affecting my hands. My struggle to walk and my frequent falling is affecting my back (I now have 3 bulging disks) causing me to be in constant pain. I also deal with muscle spasms in both legs daily which also causes me to fall frequently.My neurologist has tried many treatments along the way which include Avonex, Rebif( which was a terrible experience), steroids, and many other drugs for specific symptoms. With all of this help my MS continues to progress with more and more relapses occurring much more frequently now. In Feb. ’05 I was given my first and only infusion of Tysabri. This was the most positive response I had ever had!! My fatigue was nearly eliminated (I did not have to lie down during the day for a month or more), my walking improved, my muscle spasms were gone, the vision problems were resolving, my thought processes greatly improved, my speech returned to normal (even my singing voice returned), the incontinence problem was much improved and there was once again hope for a quality of life.

"If I have to I'll take her to Europe for Tysabri if they approve it before the f**king FDA gets off their ass."

Tysabri numbers

Color me happy.

Biogen presented their earnings today and part of that was Tysabri numbers.

Background: Biogen is Elan's marketing partner for Tysabri. In late July it was disclosed that 2 patients in Europe had developed PML -- which Tysabri has a black-box label warning for, estimated at 1 in a 1000 chances of contracting.

We went from 31,800 patients at the end of June to 35,500 patients at the end of September. (#s are totals-- 600 of those are in clinical trials). So we gained 11% patients, in a quarter where we lost over half the market cap due to PML fears.

As usual, most PR coverage was negative - even false. For example, Lisa LaMotta, a Forbes Online columnist, wrote the following (as of 10/21/08 at 9:40 PM it still says this -- I fully expect by tomorrow it will be "updated" / edited ... AFTER the immediate damage has been done.
http://www.forbes.com/2008/10/21/biogen-idec-biotech-markets-equity-cx_lal_1021markets24.html?partner=yahootix
Market Scan
Biogen Bitten By Tysabri
Lisa LaMotta, 10.21.08, 3:45 PM ET
"....Biogen Idec reported earnings that beat expectations mostly due to the sale of its two multiple sclerosis drugs, but investors were disappointed by a slight slowdown from the second quarter in the number of patients taking one of them...
...As of the end of September, more than 35,500 patients were on Tysabri,the mulitple sclerosis drug in question, down from 31,800 at the end of the second quarter...."

1) slight slowdown? The RATE OF GROWTH slowed down. but the number of patients increased!
2) use a spell checker if you are going to call yourself a Forbes journalist!!! (sorry, catty, I know)
3) First time I've heard of 35K being lower than 31K.

Almost sounds like she'd written the hit piece first -- intending simply to fill in the expected bad numbers, doesn't it?

Next -- PML risk; rated at 1:1000.
We have 35,000 on therapy now, and 3,000 from before 2006, with a total of 4 patients contracting PML. It sounds to me more like 1 : 10,000.

Elan is around $9 right now, and SO UNDERVALUED by Mr. Market that is scary. Tysabri sales are increasing and we officially hit blockbuster status -- sales of $1B (granted -- projecting forward revenues).
Before the PML scare in July just on Tysabri Elan was valued around $20. (don't get me started on the Alzheimer's drug AAB-001 and its potential -- a massive Phase III trial nearly a year already underway from it's first dosed patient and a statistically significant showing in a subgroup of gene carriers).

It will probably be one more quarter before the market shows Elan any love -- and coincidentally the next quarter which should show a large increase in quarter-over-quarter sales of Tysabri.
So I would not be surprised if Elan bounced between $8 and $11 over the next three months -- but by February of 2009 I fully expect to see Elan at about $14 - 17; a rather sweet return of 50% or so. If an interim look at AAB-001 comes in positive, then the rocketship ignites.

Regards,
Trond