ADRs in Focus: Elan ADRs slump amid 'Sell' ratings

NEW YORK - U.S.-traded shares of Elan Corp. PLC declined on Friday after two analysts dealt the Irish drug maker's stock a "Sell" rating, saying recent gains are unwarranted.

ADRs of Elan fell $1.80, or 4.9 percent, to $35.02 in afternoon trading. ADRs, or American Depositary Receipts, are securities designed to allow investors trade shares of companies based overseas.

Piper Jaffray's Caroline Y. Stewart downgraded shares of Elan to "Sell" from "Neutral" in a note to investors, saying their run-up is unjustified given the available data on the company's Alzheimer's drug, bapineuzumab.

Last month, Elan released data showing a study of the drug, which is being developed by Elan and U.S. drug maker Wyeth, did not meet its main goal, but patients lacking a certain gene benefited from the drug compared with a placebo.

Stewart questioned the analysis of the data from the trial, suggesting the data may even be uninterpretable altogether.

Shares of Elan have gained 22.7 percent since the data was released June 17. Stewart maintained her $25 price target, implying she expects shares to decline 32 percent over Thursday's close of $36.82.

Separately, Brean Murray, Carret & Co.'s Jonathan Aschoff initiated coverage of Elan at "Sell" with an $18 price target. He said Elan shares are currently priced to assume the successful development of the drug, which he said is a risky assumption.

"We have numerous concerns with the clinical development of bapineuzumab, and what we viewed to be underwhelming top-line Phase 2 results make us highly doubtful of success," Aschoff wrote in a report.

The Bank of New York Mellon Europe ADR Index lost 2.70 points, or 1.7 percent, to 156.53, while the Bank of New York Mellon Composite ADR Index declined 1.58 points to 161.97.

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