Biogen Idec Inc.'s decision to suspend sales of a highly touted multiple sclerosis drug slammed investors Monday, and perhaps none more than Primecap Management Co.
The Pasadena-based money manager was Biogen's single largest stockholder at year-end, with 32 million shares or nearly 10% of the company's total outstanding. If Primecap still owned all those shares Monday, its paper losses in Biogen's free fall totaled about $916 million.
Primecap, notoriously publicity shy, didn't respond to requests for comment. But its holdings in Biogen probably remained extensive because its biggest mutual funds lost at least 2.5% of their value in one fell swoop after Biogen and partner Elan Corp. said they were suspending sales of the drug Tysabri after a patient's death.
Some analysts said they doubted that Primecap was among the horde of investors bailing out Monday. Selling into panics isn't Primecap's style, said Jeffrey Ptak, an analyst at investment research firm Morningstar Inc. in Chicago who tracks Primecap-managed funds.
"I'd be shocked if they sold a single share" in the downdraft, Ptak said. Any changes in the firm's holdings would be disclosed in its next quarterly portfolio statements.
Primecap, which manages more than $40 billion in stocks, has built a name for itself with a research-intensive -- and patient -- investment style. It also has been willing to bet big on companies that it believes have strong long-term prospects.
Primecap is best known for two mutual funds it manages under contract with Valley Forge, Pa.-based Vanguard Group: the $8-billion Vanguard Capital Opportunity fund and the $26-billion Vanguard Primecap fund.
As of Dec. 31, Biogen was the No. 1 holding in Vanguard Capital Opportunity and the No. 2 holding in Vanguard Primecap, according to Vanguard's website. In each fund, the stock was 4.5% of total assets.
On Monday, Vanguard Capital Opportunity shares slumped 78 cents, or 2.6%, to $29.53. Vanguard Primecap shares slid $1.53, or 2.5%, to $60.81.
By contrast, most major U.S. stock indexes lost less than 0.7% for the day.
Biogen shares plunged $28.63, or nearly 43%, to close at $38.65 on Nasdaq. Elan dived $18.90, or 70%, to $8 on the New York Stock Exchange. More than 118 million shares of Biogen changed hands; trading in Elan topped 167 million shares.
Wall Street had been counting on the new multiple sclerosis drug to be a blockbuster for the two companies. Biogen and Elan said they hoped to get the drug back into the marketplace after more research.
