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Elan In Double Trouble?

Elan
CNBC.com
Elan

A few weeks ago I blogged about a couple analysts cautioning investors that shares of Irish drugmaker Elan would be volatile surrounding the Alzheimer's conference the end of this month.

That has certainly proven to be the case, especially today as the second firm this week initiates coverage of the stock, but this time with a "Sell" rating. And coincidentally, another analyst is downgrading the stock this morning to a "Sell."

In a business where "Sell" ratings are more common than they used to be, but still relatively rare it's pretty remarkable when you get two of them on no real news at the same time.

Jonathan Aschoff and Ling Wang at Brean Murray Carret & Co. are telling clients to dump the stock which they think could hit $18 within the next year or so. It's all about the Alzheimer's drug Bap, for short, which ELNshares with Wyeth. The companies are announcing detailed results of their mid-stage test at the Chicago confab in late July. But Aschoff and Wang write that the recent 36 percent run-up in ELN is "unwarranted". "We believe that many issues...will evidence themselves upon the full data release...generating downward pressure on the stock." They call the phase two data released so far "underwhelming" and say they make them "highly doubtful of success". BMC & Co. would like to do investment banking for Elan.

Meantime, Caroline Stewart at Piper Jaffray is downgrading ELN from "Neutral" to "Sell", but keeping her $25 price target. She, too, expresses skepticism about the robustness of the pending detailed data. The bottom line, she writes, in her research note to clients is that she thinks "the recent stock appreciation (is) unwarranted based on the available data and the high risks associated with any drug in development for Alzheimer's." PJ makes a market in ELN.

So, a few Elanians have been showing me some love following my blog post onBap earlier this week, but I'm sure the love-hate relationship they seem to have with me and other reporters is gonna swing back after they read this entry.

Tom Rogers, who says he has invested "six-figure money in Elan", wrote, "Thank you for the report and the neutral stance you give."

And Linda Langsjoen says, "I guess there will be no umbrage taken by us Elanians. No ganging up, either--unless it's to blow a few kisses your way!"

But then Michael Pohndorff--not an Elanian--brings me back to earth. Presumably, he's an investor in and/or an employee of Schering-Ploughand/or Merck. He complained that I had not reported on or blogged about a new study of Pfizer's Lipitor that he believes may vindicate MRK and SGP's Zetia and Vytorin. Mr. Pohndorff wrote in two separate emails: "Your silence is deafening. This underscores that you are an overly dramatic reporter who used your position to destroy a company and its investors. You are scum for not reporting on (the Lipitor study). Scum."

Questions? Comments? Pharma@cnbc.com

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