Elan faces uncertain future after Alzheimer's drug crash

Irish drugmaker Elan ($ELN) fell hard on news that partners Johnson & Johnson ($JNJ) and Pfizer ($PFE) have iced a late-stage program to develop its experimental Alzheimer's drug bapineuzumab. And the key program's collapse revived speculation about the future of the pharma group with CEO Kelly Martin expected to leave and ongoing buzz about a potential sale of the company. 

The company's shares were down 6.67% to $10.50 on the NYSE as of 10:18 a.m., a much greater decline than the modest decreases at Pfizer and J&J.

Clearly, Elan had a ton riding on the success of bapi. The Dublin-based drugmaker held a big 25% stake in the potential spoils from the Alzheimer's drug, which many believed had the potential--albeit unlikely--to be the first treatment to target one of the main suspected causes of the memory-stealing disease, beta amyloid. With no good drugs for the disease and 5 million Americans suffering from Alzheimer's, analysts projected bapi to become a major blockbuster if successful.

"We are tremendously disappointed for patients and their caregivers who are suffering from Alzheimer's and our employees who have dedicated many years to advancing this technology with the goal of creating a meaningful therapy to combat this challenging disease," Kelly Martin, CEO of Elan, said in a statement. He added that company plans to count on revenue growth from the multiple sclerosis drug Tysabri, which it shares with Biogen Idec ($BIIB), and to keep costs in check.

RBC Capital Markets analyst Michael Yee speculated that bapi's failure in the late-stage program opens the door to a sale of Elan, potentially to Weston, MA-based Biogen, which would gain full ownership of Tysabri in the deal, Bloomberg reported. Biogen has declined to comment on any such deal. 

Meantime, Elan CEO Kelly Martin has planned to leave his top job at the company after the results of the bapi studies. The drugmaker's board got Martin to stay on beyond his planned date of departure in May, presumably because the uncertain outcome of the Alzheimer's studies would have created difficulty in finding his replacement. But now that the main bapi program is dead, it's not clear that this would be a great time for a new executive to take the top job at the company.

- here's Elan's release
- see Bloomberg's article

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