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Elan's attack of Enronitis

Nature Biotechnology volume 20, page 429 (2002)Cite this article

When the Sitting Pretty Investment Club (see Nat. Biotechnol. 20, 219, 2002) met this month over a few pints down at the Bull & Bear, interim president Paisley McTort called the group's attention to stocks whose prices had been recently battered. One topic of conversation was Ireland-based Elan Pharmaceuticals, a victim of Enronitis, a condition in which the slightest hint of accounting impropriety can give any stock a migraine. Investors' fears sacked Elan's share price by two-thirds in two weeks at the end of January and obliterated six years of gains. Aspirin, please!

The whiff of impropriety is particularly strong, and therefore more worrying, for Elan than for other companies. The drug maker, already investigated by the US Securities and Exchange Commission (SEC) in 1999, is under SEC scrutiny again. Although neither the SEC nor Elan would disclose the substance of the investigation, it may in part concern Elan's special-purposes entities (SPEs), the same creatures Enron used, sporting the now-familiar names Chewco (for Star Wars' Chewbacca) and Raptor.

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  1. Tom Jacobs
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Tom Jacobs, of the Internet site Motley Fool (http://www.fool.com/), provides his angle on biotechnology investments. As Jacobs points out, “Industry insiders may know about biotechnology, but (as the song should go) 'it don't mean a thing, if you haven't learned sound investing principles.'” Read on and become “Foolishly” informed. He can be contacted about biotechnology and investing at TomJ@Fool.com. Jacobs cannot give individual investment advice but welcomes any. At this time, he owns no shares in Elan Pharmaceuticals.

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Jacobs, T. Elan's attack of Enronitis. Nat Biotechnol 20, 429 (2002). https://doi.org/10.1038/nbt0502-429

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