Biotech Values

[DewDiligence]

Re: ELN

>>I was trying to be helpful not get my comments shoved back in my face when something entirely unrelated to nanocrystal goes wrong a month later.<<

If I recall correctly, the discussion was whether ELN could survive as a going concern without Tysabri. You implied that it could by touting the value of the drug-delivery business.

I think your comments were misguided. Baring a miracle turnaround for Tysabri, whatever value ELN has will flow to its bondholders, not its stockholders. ELN’s stock is now essentially an out-of-the-money call option on a Tysabri turnaround.

For ELN’s stockholders, it probably won’t make a bit of difference whether ELN’s drug-delivery business is worth $1B (as you asserted) or a substantially different amount. Without Tysabri, there isn’t any realistic hope of the company’s repaying its debt and leaving any significant residual value for the stockholders.