Duffy resurfaces for second bite at the cherry

CANTILLION: INSIDE THE WORLD OF BUSINESS:CAPITALISM STILL works, or at least still works for some, seems to be the key lesson from the launch of the Asset Resolution Corporation (Arc). The resurfacing of former Bank of Scotland (Ireland) chief executive Mark Duffy as one of its backers has raised eyebrows. His departure from the bank this year followed a €553 million writedown primarily on various property deals concluded on his watch.

These same impaired deals are no doubt prime candidates for Arc, and the notion that Mr Duffy will get a second bite at the cherry – while the bank’s shareholders take yet more pain – does seem a little unfair. One can only imagine the public outrage that would ensue if Seán Dunne or some other property developer was able to walk away as easily from the mess they have created and then start to profit from it as seamlessly as Duffy appears to be about to.

The same is true – but possibly to a lesser extent – of Duffy’s partner Kevin Warren. While Warren Private Clients would appear to have avoided the excesses to which some of their peers succumbed, their leveraged investment approach played its part in pumping up the market here.

No doubt Duffy’s adroit handling of the media at BoSI is now paying dividends for his new venture. The fact that the British rather than the Irish taxpayer is picking up the tabs for BoSI’s Irish misadventure may also be a factor in the so far favourable reaction.

In his and Warren’s defence, it should be noted that they will have to convince investors to back him in their new venture. One can only presume they will ask Duffy and Warren the most pertinent question: why they think they will get things right in the Irish property market this time, having got it so wrong the last time.

Elan feeling bullish

Elan was uncharacteristically bullish in presenting its third-quarter figures yesterday. With sales of its key drug, the multiple sclerosis treatment Tysabri, pushing ahead 16 per cent year-on-year and completion of the $885 million Johnson Johnson investment, the Irish biotech group now expects to record an operating profit in the fourth quarter.

For the first time, it put a figure on the long-promised Ebitda profit it expects for the year as a whole, $75 million. Even the failure of revenues to match analysts’ projections failed to dampen the mood, as a strong focus on costs across the group more than compensated.

With sales of Tysabri continuing to grow – the company cited a noticeable pick-up in Europe after a slack July/August period – the reduced cost structure bodes well for profitability in the medium term.

The one issue on which company executives adopted a noticeably low-key approach was the admission by its US partner Biogen for the first time that the risk of patients contracting a rare but serious brain disease, PML, does increase with the length of time they are taking Tysabri.

There are 46,300 patients on Tysabri, and both Elan and Biogen have been at pains to point out that the incidence of PML remains well within the one in 1,000 stated on its prescription label.

However, figures released by Elan yesterday show that only 13,400 patients have received the drug for more than 24 months. A further 1,600 clinical trial patients have also reached that benchmark.

Biogen said it was now in discussions with the US regulator, the Food and Drug Administration, about amending the drug’s label, though no details of what that will entail were available.

With the MS drug already accounting for two-thirds of Elan’s revenue, uncertainty on it is the last thing it, and its new largest shareholder, Johnson Johnson, will need.

Speak no evil

Facing the Irish business and technology press in Killarney earlier this week, Google boss Eric Schmidt seemed subdued, having literally just flown in from Silicon Valley, piloting his Gulfstream jet himself for part of the journey. But he didn’t let it slide when, near the end of the session, The Irish Times slipped in a question about the European Commission and its fondness for levying billion-euro fines on Microsoft and Intel for abusing dominant market positions. Given Google is dominant in many of its markets and has already fallen foul of European privacy advocates, does Schmidt have any concerns?

“I’m not sure I agree with the premise of most of your question, so maybe you should ask a different question or ask it in a different way,” he said matter of factly.

A more general question on relations with the commission was greeted with the response that all was well. European regulators were doing their job, while Google does its best to ensure it’s law-abiding.

Nominally chairman and chief executive, Schmidt is one of the triumvirate, with founders Larry Page and Sergey Brin, that run Google. The trio have avoided falling foul of regulators to date possibly because of their choice of hired help. In Europe, communications is headed up by DJ Collins, a former New Labour spin doctor who now advises the UK’s foreign secretary David Miliband in his spare time. Former BBC Newsnight editor Peter Barron, who knows a thing or two about getting answers from reluctant politicians, heads things up for Collins in northern Europe. And Schmidt reminded us that he’s an adviser to the current White House administration. Seems Google could teach the old tech guard a thing or two about playing the political game.

Today:

Fitch Ratings will discuss the outlook for western European banks at a conference in Dublin’s Merrion Hotel this morning.

Tonight: Ernst & Young will name its Entrepreneur of the Year at a televised awards ceremony in the Citywest Hotel.

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