Jefferies Maintains Buy on Elan, Remains Top Pick

Jefferies & Company has published a research report on Elan Corporation (NYSE: ELN) after the company has showed signs of "perking" up again.

In the report, Jefferies writes, "There has been a sudden surge in excitement on Lilly's (LLY/$39.27/HOLD) competitive product solanezumab (final Q3 data in 2H 2012), and although there are similarities, the two products are quite different. A Jan. 2008 paper compared the two directly in a mouse model. Solanezumab only binds "soluble" A-Beta peptides and not the "plaques" created by aggregation of the peptides in the brain. In addition to zero clinical evidence of efficacy, solanezumab doesn't prevent AD-like pathologies in mice. It relies on a "sink" hypothesis in which removing AB peptides from the blood plasma would suck AB peptides out of the brain to prevent further plaque formation; yet there is no evidence for this. Hence when the P3 futility analysis is performed in the next few weeks, we don't want investors to worry that a failure with solanezumab should present any condemnation of bapineuzumab."

Jefferies maintains its Buy rating and $20 price target on Elan, which closed Friday at $11.32.