Shares in Elan lost a quarter of their value and US partner Biogen Inc's stock fell today after the groups said a new drug did not meet hopes in a late-stage trial.
Shares in Elan, which rose 10 per cent in Dublin just prior to release of results for its Antegren drug for Crohn's disease, an inflammatory bowel condition, were down 25 per cent to €4, and Biogen shares fell 4.6 per cent to $39.3 by noon.
Elan and Biogen, in a joint release, said Antegren did not meet the primary endpoint of response as defined by a 70-point decrease in the Crohn's Disease Activity Index at week 10 of the trials.
"It's disappointing in that we expected them to have shown some response given that Phase II trials did show significant response," analyst Mr Ian Hunter at Goodbodys Stockbrokers in Dublin said.
In their statement, Elan and Biogen said Antegren had failed to produce the desired result in part because of a larger-than-expected placebo response rate.
Antegren is considered one of the key elements in efforts to restore Elan to health after the company's shares slumped last year after US regulators began investigating its accounting practices.
The company, whose market capitalisation at its peak was $22 billion and was the biggest on the Irish Stock Exchange, lost 90 per cent of its value. It has since clawed its way back and is now valued at around $2.1 billion.