Zeev's Turnips Patch-No Politics (ZEEV)

[Bearmove]

By Quentin Fottrell

Of DOW JONES NEWSWIRES

DUBLIN (Dow Jones)--Shares in Elan Corp. PLC (ELN) surged Monday after the Irish drug group and U.S. partner Wyeth (WYE) said they will start early Phase III clinical trials of AAB-001, their treatment for mild to moderate Alzheimer's disease.

With Phase III starting in mid-2007 rather than mid-2008 as previously expected, analysts say AAB-001 could potentially receive approval by the U.S. Food & Drug Administration by late-2008.

Investors liked the news, which indicates increased confidence in the Alzheimer's program. At 0915 GMT, Elan shares were up 12%, or EUR1.40, at EUR13.10 in Dublin, out performing the broader market with the ISEQ Overall Index up 0.7% at 9739.

Although Phase II is not yet complete, the two drug companies said Phase III clinical trial design will be finalized with regulatory agencies, and subject to their approval, it will begin in the second half of 2007.

NCB Stockbrokers' Orla Hartford, who rates Elan a buy, said there was "real potential" for early filing of AAB-001, adding that interim analysis of Phase II over the next three months could "transform Elan's investment case."

She said that evidence of plaque reduction on the brain by AAB-001 with statistical evidence on quality of life improvements would provide a "compelling case" for filing AAB-001 for approval after Phase II is completed.

Goodbody Stockbrokers' Ian Hunter welcomed the early Phase III, but added, "The only frustrating element for the market is that, given that the Phase II trial is ongoing, we will not get a sight of the data until early 2008."

Hunter maintains a buy recommendation on Elan, predicting "conservative" peak annual sales for AAB-001 of $2.2 billion by 2014 should the treatment get final approval by the regulatory authorities.

"The Alzheimer's market is huge," Hunter said. "It has the potential to be the next big indication for pharmaceutical companies, especially as the baby boomers come into the Alzheimer's-prone age group."

Company website: http://www.elan.com