Elan shares rise on Tysabri review

Elan shares surged yesterday after the company announced it had discovered no further cases of progressive multifocal encephalopathy (PML) in its review of patients taking its breakthrough multiple sclerosis drug, Tysabri.

The Irish biotech company and its US partner in the Tysabri project, Biogen Idec, said the companies had concluded the safety review of more than 2,000 patients involved in clinical trials of the drug since they voluntarily withdrew it from the market in February.

It also tested patients who had taken the drug following its launch late last year. The companies said they were taking preliminary steps to restart clinical trials for MS patients as a result of the findings.

Analysts predict the drug, on which Elan had built its hopes following its near collapse in the wake of accounting concerns, will return to market.

"The announcement is a signal to patients and the US Food and Drugs Administration (FDA) of the companies' belief that Tysabri can make it back to market," said Davy analyst Jack Gorman. NCB's Orla Hartford said the drug was likely to be back on the market in early 2006.

However, opinions are divided over how successful the drug will be for Elan and its partner following the suspension.

Elan and Biogen expect to meet the FDA, which will decide on a return of the drug to market, in autumn. The FDA fast-tracked approval of Tysabri in 2004.

The suspension of the drug by the companies in February followed the discovery of two cases of PML - a generally fatal neurological disorder - in MS patients who had taken Tysabri in association with an older Biogen treatment, Avonex. One of the two patients died.

During a review of patient records, a third case of PML was discovered in a patient on a separate trial of Tysabri as a treatment for Crohn's disease. The cause of death of that patient, who had died before the drug's suspension, had been misidagnosed. While the Crohn's patient was testing Tysabri, they had also been taking steroids.

Shares in Elan jumped 40 per cent at one stage in Dublin yesterday in heavy volume, before settling back to trade 23 per cent higher at €7.54. In New York, the response was less exuberant, with the shares climbing 18 per cent to $9.49 (€7.68).

Elan and Biogen said the safety evaluation of patients on trials of Tysabri as a treatment for Crohn's and rheumatoid arthritis was continuing and was expected to be concluded by the end of the summer. Ninety-one per cent of the MS trial patients participated in the safety review.

"Our evaluation is a rigorous medical and scientific undertaking led by some of the world's leading experts in neurology and neuroradiology," said Biogen's senior vice-president for medical research, Whaijen Soo. "We are encouraged by these findings."

Merrill Lynch analyst Erica Whittaker said she believes Tysabri will return to the market in early 2006, but in a limited clinical setting, restricted to MS patients with no other treatment options.

(Additional reporting by Reuters)