Elan shares drop 45% on new Tysabri disease cases

Elan shares lost almost half value in Dublin today, dragging the Iseq index down 6 per cent and wiping almost €3 billion off the value of the company.

Shares in the pharmaceutical giant fell over 66 per cent this morning rallied later, before closing at €7.35 this evening.

The share price collapse follows the release to regulators last night of details of two confirmed cases of a potentially deadly brain disease in patients being treated with Tysabri. Both patients are in Europe and one is being treated in hospital.

The share price fall has cut the company's market capitalisation to €3.4 billion. Elan shares have fallen over 67 per cent in the last five days and had been under pressure due to mixed results from clinical trials on bapineuzumab, a treatment being developed for Alzheimer's.

Elan's fall dragged the Iseq down over 6 per cent to 4,102 having earlier dipped below the 4,000 mark to levels not seen in over five years.
In a conference call to investors and brokers today Elan and Biogen said they had notified regulators of two confirmed cases of the potentially deadly brain disease - progressive multifocal leukoencephalopathy (PML) - in multiple sclerosis (MS) patients being treated with Tysabri. Elan said recently that 31,800 patients were using the drug.
The companies declined to discuss the likely impact of the finding on the company's share price or future earnings.
Asked during the conference call what the reaction had been from neurologists, the companies said the medical professionals contacted had been grateful for being notified. Elan and Biogen plan to contact all 3,000 prescribing US-based doctors in relation to the incident and also those in Europe.

"The market has completely taken out the valuation of Tysabri,'' Dublin-based Goodbody Stockbrokers analyst Killian Murphy said. "It seems unlikely now that they'll be able to reach their 100,000 target."
Davy analyst Jack Gorman said the news was a huge blow to Tysabri, although it was good that the management programme had identified the patients.

"The impact on neurologist take-up puts our forecasts at serious risk", he said, adding that the brokerage's valuation on the stock was now under review.

Tysabri returned to the market in 2006 with warnings after the US Food and Drug Administration decided MS patients willing to accept the risks, should be able to have access to the drug's potential benefits.

"We've said all along, and the FDA has also stated and it's clearly outlined in our label that we expect to see additional cases of PML," Biogen spokeswoman said last night.

She said the company believes that heightened clinical vigilance has been the best way to monitor for PML and that heightened vigilance was critical in identifying these cases.

"Withdrawing the drug is not under consideration."

Tysabri, co-marketed by Ireland's largest pharmaceutical firm Elan and Biogen, also won US approval this year to treat adults with moderate to severe Crohn's disease who have had a poor response to, or cannot take, other therapies.

Additional reporting agencies