Tysabri news boosts Elan shares

US regulators said last night they would allow Elan and Biogen to resume use of their multiple sclerosis drug Tysabri in patients who had previously been taking it as part of a study.

The Food and Drug Administration (FDA) said it will decide in late March whether the companies can resume widespread sales of the drug, which were halted in February 2005 after reports of a potentially fatal brain condition in a small number of patients.

The FDA, in a notice on its website, said it remained "very concerned" about the possibility that patients who take Tysabri may develop the rare brain ailment, known as progressive multifocal leukoencephalopathy or PML.

The level of risk is unclear, the FDA said. It noted that Tysabri "is a very effective product" for MS, a progressive auto-immune disorder that can cause blurred vision, weakness, poor muscle coordination, and loss of memory and mental function.

Biogen shares rose as much as 4 per cent on the news. At the close of trading on Nasdaq, Biogen was up $1.34, or 3.02 per cent, to $45.72. Elan shares rose by 3.12 per cent (and in mid-afternoon trading were up 65 cents, or 4.61 per cent) to $14.54 on the New York Stock Exchange.

Earlier this month Elan reported a smaller-than-expected fourth quarter loss on the back of good revenue growth and tight cost control. At that point it said it hoped to relaunch Tysabri in the US in the second quarter of this year.

Elan said it was "optimistic" about the return of the multiple sclerosis treatment to the market and planned to spend $150-$170 million (€126-€143 million) on researching and marketing the drug this year.

Elan hopes European approval will follow US approval, allowing it to launch the product in Europe in the second half of the year. For Tysabri to reach break-even point for Elan, the drug - which is expected to cost $23,500 per patient per annum - would need to be prescribed to 20,000 patients.

Meanwhile, the company is also making progress on its research into Alzheimer's disease, on which it expects to spend more than $50 million this year.

It hopes to be able to move into phase three trials with one of its Alzheimer's drugs later this year.