Thursday, September 09, 2010

The Power of DOTY: IVB Fake Award Used as a Shield for Elan/J&J

It was with amusement that we noted Elan CEO Kelly Martin hold up our little old blog as part of his defense of Elan's "18% solution" transaction with Johnson & Johnson, itself a small part of his unusual and unusually lengthy defense of his leadership of Elan. We were amused because we always assumed we were the Rodney Dangerfield of biopharma weblogs, but were encouraged to hear otherwise.

Martin wrote in his 16-page letter to shareholders on Monday:

Johnson & Johnson transaction: First, it is important to remember that this was an excellent transaction that significantly reduced our science, financial and execution risk around the immunotherapeutic approach to Alzheimer’s as well as allowing for the acceleration of the development of this technology and approach to the treatment of patients, while at the same time enabling shareholders to participate in the potential for substantial longer term value creation. I noted the positive comments from Moody’s earlier. The highly respected IN VIVO Blog also named it the 2009 M&A/Alliance deal of the year.
Ahem. Actually, dear readers, it was YOU who named Elan/J&J as the 2009 M&A/Alliance of the year last year (with only 39% of the vote, but we don't have time for run-offs). Deal of the Year (a.k.a. "The Doty" a.k.a. "The Roger") is an open vote, and as such, we were in some respects just the messenger. Sure, we nominated the deal -- along with four other deals in that category -- but it was you guys who determined the winner.

As such, Kelly Martin's defense of the J&J deal will have to remain without our official imprimateur (besides, nobody from Elan ever stepped forward with an acceptance speech!). That said, we do stand by our initial assessment, made last July, that the deal helps Elan out of a jam. And with Alzheimer's products sadly running into trouble left right and center, sharing and hedging risk particularly in this extremely difficult area of drug development continues to make sense to us.

The whole episode has us hankerin' for the 2010 DOTY competition. Depending on how the looming proxy battle with Sonderby & co plays out (see our full coverage in "The Pink Sheet" DAILY) maybe Elan will get another nod this year.

No comments: