Let me cut to the chase, Brian: Elan
Oh, you want reasons, too? OK. You may have heard of this promising little drug called Tysabri. Clinical trials and nearly a year of real-world sales and treatments have so far agreed that this is the best thing to happen to multiple sclerosis patients since, well, the Philly cheesesteak sandwich.
Yes, it's that good. Three years of treatment results have shown a 68% reduction in relapses. One relapse in 4.3 years isn't a bad average, considering that the patients receiving this treatment have already tried other drugs. Spend a few minutes or hours on the Motley Fool Elan board (30-day board passes free for the asking) and you'll be astounded at the tales of hope and of a better life shared there. No other treatment comes close today, and I don't see any credible threats on the horizon for the next several years.
There are 400,000 MS patients worldwide. Let's pretend for a moment that Tysabri can't help patients who have tried and given up on other drugs. In that case, a conservative 10% market share reflects about $1.2 billion in annual sales. My rough shortcut has Elan getting one-quarter of the revenue, after accounting for expenses and profits shared with Elan's Tysabri partner Biogen Idec
And that assumes that no other product in Elan's R&D portfolio matters in the slightest, which is not the case. See, Elan also has a couple of very promising Alzheimer's treatments in trials right now -- in a collaboration with drug giant Wyeth
So you could actually look at Tysabri as a risk buffer that lets you gamble on Elan's Alzheimer drugs' success.
Elan management expects Tysabri sales to hit $300 million this year, and refuses to give out guidance beyond that. Based on the patient uptake needed to hit that early target, the run rate will be about $700 million at the end of the year, making that 10% share look like a slam dunk in 2008.
Granted, Elan isn't a stock for impatient investors, but those with patience will be rewarded in spades. Having held the stock for nearly two years, I intend to be one of them.
You're not done yet!
Fool contributor Anders Bylund owns shares of Elan and Pfizer but holds no position in any of the other companies discussed here. MS matters to him -- his kindergarten teacher faced wheelchairs and bed rest because of this disease. And yes, he's young enough to remember her. You can check out Anders' holdings if you like. Foolish disclosure is an invaluable asset.