Shares in troubled pharmaceutical group Elan were subjected to much volatility on the Irish market yesterday, gaining almost 10 per cent at one stage before closing up three cents at €3.45.
The stock has now made gains of more than 55 per cent on the Dublin market within the past week as rumours of a possible acquisition by drugs giant Bristol-Myers Squibb continue to circulate.
In New York, where the shares are mainly traded, the stock climbed by 6.41 per cent to close at $3.65 last night.
In the Irish market, the stock also benefited from an upgrade delivered by NCB on Friday. The broker has changed its recommendation from "reduce" to "hold".
NCB argues that Elan's revenue targets for the coming 18 months appear realistic, as do annual revenue projections ranging between $300 million (€308 million) and $500 million.
The upgrade was made ahead of the company's announcement that it had made its first asset disposal in a programme designed to raise $1.5 billion.
NCB analyst Mr David Marshall said yesterday he was still "reasonably sceptical" on Elan's ability to meet its goal of raising $1.5 billion before December 2003 but acknowledged that the company had time on its side.
Mr Marshall said a takeover was unlikely as long as an investigation by the US regulator, the Securities and Exchange Commission, and general uncertainties about the stock were outstanding.
He added that the company had managed to achieve a good price for the sale of the rights to Nifedipine tablets on Friday, which suggested Elan might be in a position to generate auction sales as its divestment programme progressed.
Merrion Stockbrokers analyst Mr Peter Frawley said in a research note yesterday that Friday's divestment provided "an early indication of the potential hidden value that may exist within Elan".
Mr Frawley estimates that the company has raised $35-$40 million in the deal.
Merrion retains an "avoid" recommendation on the stock.
Meanwhile, the effects of Elan's moves to unwind the 55 joint-venture programmes in which it is involved have begun to bite.
Tiny US biotechnology firm Incara Pharmaceuticals said it had halted the enrolment of new patients in its trials of an experimental drug, citing the uncertainty of continued funding from Elan.
Last week, Elan terminated joint-venture agreements with Sheffield Pharmaceuticals. - (Additional reporting by Reuters)
