Elan shares slump over Tysabri drug review

SHARES IN Elan slumped yesterday after the European Medicinces Agency (EMEA) announced a review of the risks and benefits of its key multiple sclerosis drug Tysabri in the wake of 23 cases of a rare and potentially fatal brain disease since it came to market.

The stock slid as much as 23 per cent in New York trade before rallying slightly to close 16.5 per cent weaker. In Dublin, the shares were 20.5 per cent weaker.

Elan’s US partner in the drug Biogen Idec was less severely hit, with its shares closing about 5 per cent off.

The market was spooked by the figure of 23 cases of progressive multifocal leukoencephalopathy (PML). Last month, the US regulator, the Food and Drug Administration (FDA), said only 13 PML cases had been recorded since the drug’s return to market in July 2006.

“These new cases are likely to alarm physicians whose comfort with the product had been increasing in recent months,” said Sanford Bernstein analyst Geoffrey Porges.

It was unclear last night if the EMEA figure included three earlier PML cases which led to Tysabri being pulled from shelves in early 2005, just months after its initial market launch.

Biogen and Elan had refused to update investors and patients on PML case numbers when they reported third-quarter profits last Tuesday and Wednesday. Last night, they declined to provide further details on the new cases and it was unclear how long the affected patients had been on the drug, where they were located or what their current condition was.

The companies were already discussing label amendments with the FDA after Biogen conceded earlier this week that the risk of contracting PML increased with the length of time patients were on the drug.

The EMEA announcement said the review would “discuss any additional measures necessary to ensure the safe use of Tysabri and how to balance the risks to the patients against the benefits of the treatment”.

Tysabri accounts for two-thirds of Elan’s revenue and is seen as the most important driver of medium-term growth at the company. The Irish biotech group this week reported a 30 per cent increase in patient numbers over the 12 months to the end of September.

On the back of that growth, chief financial officer Shane Cooke said Elan would be profitable at an operating level in the current quarter, ahead of schedule.

In a note to clients yesterday, Goodbody analyst Ian Hunter: “Any pullback on expectations which could be driven by imposition of further conditions on the sale of the drug both in the US and ex-US (eg limits on length of drug exposure, requirement for drug holidays, implementation of safety programmes in the EU) would have a material impact on Elan.”

Both Elan and Biogen point out that the incidence of PML remains below the one-in-1,000 risk cited on the drug’s label. They also point to its efficacy in slowing and possibly even halting the progression of multiple sclerosis.

In a presentation to analysts this week, Elan president Carlos Paya said the development of “a simple and reliable test” that can accurately detect the presence of JC Virus (without which PML cannot develop) in patients before and during Tysabri therapy is the first step and of paramount urgency. It could “allow for rapid identification of those patients that should have almost no risk of PML. Current data suggest that 30-50 per cent of patients are JCV negative, depending on the test used,” Dr Paya said.