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Early Tuesday, the news wires reported that the FDA had issued a warning that the drug Tysabri may cause liver damage in certain users. Shares of Elan (ELN, news, msgs) fell as much as 10% after the announcement.
Later in the day, an FDA spokeswoman said the warning does not reflect new cases but is simply a reiteration of a revised label the FDA required on Jan. 16, when it approved the use of Tysabri for patients with Crohn's disease.
In preparation for the rollout of Tysabri for Crohn's disease, Elan and Biogen Idec (BIIB, news, msgs) sent letters to doctors to make sure they were aware of the need to monitor liver function. This is standard practice, and it's a good practice, but it's not cause for concern.
A lot of people sold the stock on the first news report before the FDA clarified the situation. Since the stock was still down by more than 6% at the end of the day, so investors who like to wait for the facts to come out before making their decisions can still get some shares at a good price.
That's what I'm going to do. Elan is already in my portfolio, but I can't resist adding a little here.
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