At first, investor reaction to Elan's announcement that the drugmaker is looking to sell, merge or concoct some other maneuver was welcome as the stock moved up early today.
But as the day wore on, more shareholders may feel the same as Jack Schuler of Crabtree Partners, which holds about 5 million Elan shares. Schuler, a former Abbott Labs president, last month went public with an angry missive complaining that Elan ceo Kelly Martin is inexperienced and, moreover, a big spender. He called for Martin's ouster and is even more upset after hearing about the new 'strategic' review.
While walking the crowded halls at the JP Morgan conference, Schuler called us and has this to say:
"We are very disappointed and this is exactly what we were fearful of. We want to have a change at the top of the company. We feel the management team, particularly the top people, coming from Merrill Lynch is not the right background for running a company like this. There's a fair amount of arrogance, and very extensive spending.We'll have more on Elan in the next issue of The Pink Sheet DAILY...--Ed Silverman
They believe there is extreme value in the drugs and the Alzheimer's drug has tremendous potential. And Tysabri should be used for most all MS patients when you consider the alternative of not taking it. This management team has totally mismanaged that drug and we're fearful they'll mismanage the Alzheimer's drug. They don't need cash. Their debt is due in 2011 and were close to selling one division for more than $1 billion, and as soon as the credit crisis improves a bit, they'll be able to. And if they cancel the contracts for the planes and cut expenses and Tysabri sales go up, they'll get up there.
We're fearful he'll structure a deal that doesn't require shareholder approval, which he knows he would not get. This not the time to sell the company or give away the rights to your very promising drugs. There's no need to. We're fearful because he's under such pressure to resign he'll try some sort of desperate move like this. This is not the guy to be negotiating anything right now. We really are appealing to the board to take control of this company and put people in charge who have experience in pharmaceutical business, particularly marketing."