Elan chairman Kyran McLaughlin has bought 90,000 shares in the company.

Mr McLaughlin, a director of Elan since 1998, first bought shares in the pharmaceutical group only last February, a month after taking over as chairman from Dr Garo Armen.

Following the latest purchase, he now holds 100,000 shares in the company. Mr McLaughlin paid $465,741 (€361,642) to increase his holding in the company, which now stands at a quarter of 1 per cent of the stock.

He paid $5.1749 apiece for the shares in the transaction, which took place on Friday.

Elan shares have been rising strongly since it reported first-quarter results last week.

The stock jumped close to 30 per cent at one stage in Dublin yesterday as the Irish market tracked events in new York on Monday when Dublin was closed.

However, following the opening of the US market, the stock gave up some of those gains.

Analysts said investor sentiment towards the company had been improving since both Elan and its partner in the production of Tysabri, Biogen, held out the prospect of a return to market by the key multiple sclerosis drug when they announced figures for the first three months of 2005.

The drug was withdrawn from the market at the end of February after two patients in clinical trials were diagnosed as suffering from a rare and generally fatal neurological disease.

Though neither company was able to give any hard information on the progress of a review of safety data from clinical trials of the drug for MS, Crohn's Disease and rheumatoid arthritis, they expressed confidence that the drug would return to the market.

Elan chief executive Kelly Martin told investors: "I certainly believe that, given the unmet medical need and given the efficacy of Tysabri, that this will ultimately be back in the hands of patients and their doctors."

The company was trading last night at $6.39, 50 per cent ahead of the price last Wednesday just ahead of the quarterly figures.

However, Goodbody analyst Dr Ian Hunter believes that Elan's share price is running ahead of itself following the recent surge.

He said the US price on Monday was assuming not only a return to the market by Tysabri but also that it would prove to be worth close to $3 billion to the two companies. "We believe that, on currently available information, the valuation is stretched," he wrote in a note to clients.