Thu, Jul 26, 2012, 01:00

Inside the world of business

Elan bears brunt after Alzheimer drug fails trial

BIOTECH GROUP Elan is cursed with jittery shareholders. News that its Alzheimer’s drug bapineuzumab had failed to deliver in one of four pivotal clinical trials was never going to be good news – even if it was largely expected by most market observers. However, the way the market treated the three companies involved in the trial was instructive. US pharma giants Pfizer, which made the announcement, and Johnson Johnson both were knocked back by about 1 per cent: stock in Elan plunged about 15 per cent on the news.

Frustratingly for the company, it has little insight into the trials or the flow of news on results after conceding control of its stake in the drug’s development to its partner JJ.

Chief executive Kelly Martin yesterday refused to be held to account for short-term movements in the market as he delivered a trenchant defence of the company’s performance under his watch and its prospects.

Notably, he said the company was not dependent on any positive news from the “bapi” trials for its future growth.

But the news is mixed elsewhere. The company reported second quarter results yesterday that were seen as slightly below expectations – despite a 13 per cent increase in the number of people taking its blockbuster multiple sclerosis therapy Tysabri.

The problem lies in Europe, where adverse exchange rates against the dollar and a pricing row in Italy knocked revenue back. In an era of ever tightening health budgets, such disputes are only like to increase.

On the upside for Elan, new research published in the Journal of the American Medical Askeaton says that most commonly prescribed MS drugs – Avonex, made by Biogen, Bayer’s Betaseron and Merck’s Rebi – fail to halt the progression of the disease. Ludwig Kappos of University Hospital in Basel, Switzerland, and author of an editorial that accompanied the study cited Tysabri and Novartis’s Gilenya as more effective treatments.

Quote of the day

A scheme of mesmeric complexity that reeked of dishonesty and sharp practice

– Mr Justice Peter Kelly on moves by Seán Quinn and members of his family to hide assets sought by Anglo Irish Bank to repay loans

Will profits from Providence oil find ever be brought onshore?

WHEN PROVIDENCE Resources announced on March 15th that it had discovered the first commercially-viable oil flow rate in Ireland, the news made headlines around the world. The notion that the financially-strapped Emerald Isle had struck oil was an irresistible draw for media outlets looking for some St Patrick’s Day-themed copy.

Yesterday’s news that the find is much larger than expected once more puts the sticky question of how much the State coffers will actually benefit from the resource into the spotlight.

Unsurprisingly, Sinn Féin was first out of the traps yesterday, saying that the discovery showed the need for “radical changes to the licensing and revenue terms governing oil and gas exploration”.

As a Labour politician, Minister for Natural Resources Pat Rabbitte must be a tad uncomfortable. Rabbitte has defended Ireland’s 25 per cent corporate tax rate for oil development (which is lower than that of Norway, France and Spain for example) by pointing out that Ireland has a dramatically lower numbers of oil fields. Similarly he argues that the general lack of interest shown by international oil companies in Ireland is proof that the tax rate is not too generous.

The discovery of better than expected levels of oil has turned the tables somewhat, even if most people would agree that the State would never have had the resources to successfully drill for oil.

The debate looks set to intensify over the coming months as Providence advances its plans for drilling off the Dalkey coast.

What is certain though is that Providence will be driving the project less and less. The company typically “front ends” oil discovery projects, bringing in partners at the development phase, which means that some of the world’s biggest oil names are likely to be arriving on Irish coastlines to bring the profits onshore, as it were.

Government politicians yesterday were keen to stress the benefits to the exchequer through taxation and the new jobs that will be created in bringing the oil ashore.

As they face the prospect of a serious commercial oil industry emerging in Ireland, they’ll be hoping that these benefits will be enough to please a cash-strapped public.


The Central Statistics Office publishes the latest tranche of data from the 2011 Census – this time on the world of work.


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Where the Nama properties lie

NOW THAT the National Asset Management Agency has completed the full transfer of the €74 billion of loans from the banks, it finally has had a full picture of what’s on its books.

This has allowed Nama to crunch numbers and provide a good bit more detail. The 149-page annual report contains plenty of new graphs, charts and information that will keep Nama and property anoraks happy for hours.

One interesting graph shows a breakdown of the regional location of properties worth €4.5 billion outside Dublin and Cork.

Nama has properties worth €11 billion and €2 billion in Dublin and Cork respectively within Nama’s €17.5 billion Irish property portfolio, which accounts for 54 per cent of overall assets.

Unsurprisingly, Galway and the Dublin commuter belt counties of Kildare, Meath, Wicklow and Louth feature high on the list given how builders were drawn to the large population spreading out from the capital.

Galway is top of the list with more than €800 million of the €4.5 billion in properties based on November 2009 values. Some of the highest property price increases outside Dublin and its commuter belt counties were recorded in Galway during the boom years.

Kildare follows Galway with about €750 million. Then there is Meath with about €550 million and Wicklow with less than €500 million. Limerick has €450 million of loans, Louth about €330 million and the remaining counties each are below €200 million.

Almost half of Nama’s €1.3 billion properties in Northern Ireland are in Belfast, with the bulk of them split between Antrim and Down, followed by €300 million in Derry. London accounts for 62 per cent of €10.9 billion properties in Nama’s UK portfolio with 32 per cent of the book in the rest of England.

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