David's Trade Journal

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Elan soars on renewed Tysabri hopes
By Aude Lagorce & Val Brickates Kennedy, MarketWatch
Last Update: 10:13 AM ET Aug. 9, 2005

BOSTON (MarketWatch) -- Elan Corp. shares rocketed Tuesday after the Irish pharmaceutical firm and U.S. partner Biogen Idec said a safety review of multiple sclerosis patients who took Tysabri revealed no new confirmed cases of a rare but fatal brain disease.

Elan (UK:ELA: news, chart, profile) (ELN: news, chart, profile) and Biogen (BIIB: news, chart, profile) have been conducting an exhaustive review of former Tysabri users to see if any have developed the brain disease PML, or progressive multifocal leukoencephalopathy. The companies said that an additional review of Tysabri patients who took the drug to treat Crohn's disease or rheumatoid arthritis is expected to be completed by the end of the summer.

Elan soared 16% to $9.31, while Biogen spiked 6% to $40.73 in early trade.

To date, the companies have confirmed three cases of PML, two of which were fatal. Tuesday's news discounts recent media reports that additional cases of PML had recently been discovered among former Tysabri users.

The companies withdrew Tysabri from the market and halted all clinical trials of the drug in February after detecting the presence of PML in two Tysabri users. The Food and Drug Administration approved Tysabri for the treatment of multiple sclerosis in November 2004.

Elan and Biogen said they are now taking preliminary steps to restart clinical trials in MS and will make submissions to regulators in the early fall. The companies also plan to meet later this fall with regulators to discuss the feasibility of putting Tysabri back on the market.

"I think it's positive news for the stock of course, but it's also a clear message to patients with multiple sclerosis that the companies are preparing to submit applications for the return of the drug to market," said Jack Gorman, an analyst with Davy Stockbrokers.

Gorman believes the earliest Tysabri could make a comeback would be early 2006.

"Confidence has increased that a return to market is possible," he said.

What is particularly good news, according to Olga Hartford, an analyst with NCB Stockbrokers, is that the announcement confirms there are no new cases in monotherapy treatment, meaning when Tysabri is used alone rather than in combination with another drug like Avonex.

Ian Hunter, of Ireland's Goodbody Stockbrokers, said the news gives Elan and Biogen a much stronger position to take to the U.S. Food and Drug Administration.

"It also shows that the companies are now quite advanced in their capacity to diagnose PML," he said.

Multiple sclerosis is a chronic disease of the central nervous system that affects more than a million people worldwide. Symptoms may include vision problems, loss of balance, numbness, difficulty walking and paralysis.

After the drug was withdrawn, shares of Biogen and Elan plummeted and Wall Street largely wrote off a comeback for Tysabri.

Three of the existing MS therapies are part of a class of drugs known as beta-interferons that require injections at least once a week.

They include best-selling Biogen's Avonex; Serono's (SRA: news, chart, profile) Rebif; and Betaseron from Berlex Inc., a U.S. affiliate of Schering AG (DE:717200: news, chart, profile) (SHR: news, chart, profile) . Pfizer (PFE: news, chart, profile) co-markets Rebif.