European regulators have recommended approving Acorda Therapeutics Inc's drug Fampyra, which is designed to improve the walking ability of patients with multiple sclerosis, reversing an earlier decision.

The European Medicines Agency, which advises the European Commission on whether to approve new drugs, said in a statement it has recommended giving the drug conditional approval.

US biotechnology company Biogen Idec acquired European rights to the drug, also known as Ampyra, in 2009 and is in charge of commercialisation and marketing it in Europe.

Conditional approval means Biogen can start selling the product once it is formally approved - expected within 67 days - but the company will have to provide additional information once it is on the market. If and when all the conditions are met, it will receive full approval.

"This is a major milestone for the company," said Ron Cohen, Acorda's chief executive.

The drug was approved in the United States in January, 2010, but in January this year, European advisors rejected the drug, saying they were not convinced it conferred a clinically meaningful benefit.

Under terms of their agreement, Biogen paid $110 million upfront for the European rights to the product, and agreed to pay up to $400 million more in milestone payments. Acorda will also receive a double-digit percentage royalty. Approval in Europe triggers a $25 million milestone payment to Acorda.

Separately, Merck & Co's new hepatitis C drug Victrelis was recommended for approval in Europe today, just one week after being approved in the United States, Europe's medicines watchdog said.

Victrelis, or boceprevir, will go head to head against Vertex Pharmaceuticals Inc's telaprevir, or Incivek, in the multibillion-dollar hepatitis C market.

Earlier this week, Merck clinched a deal with Roche Holding AG for the Swiss company to co-promote Victrelis in the United States.

Incivek, which demonstrated a cure rate as high as 79 per cent in clinical trials, is expected to win US approval next week. The Merck drug cured 66 per cent of patients in its pivotal studies, while current standard treatments cure only 40 per cent or less.

Victrelis, like Incivek, is a pill that blocks the protease enzyme that hepatitis C needs to replicate.

Industry analysts expect eventual annual sales of up to $3 billion for Incivek, which will be sold overseas by Johnson & Johnson. Victrelis is seen garnering sales of more than $1 billion.

The new drugs, aside from higher cure rates, can dramatically cut treatment durations for some patients.

The EMA also recommended Bristol-Myers Squibb Co's Yervoy - the first drug to help patients with advanced melanoma live longer - for approval. It said its expert committee on new drugs had backed the drug as a treatment for patients with advanced melanoma who had received prior therapy. The drug was approved in the United States in March.

Advanced melanoma can quickly spread from the skin to internal organs, such as the brain. Once melanoma spreads, the average survival is typically six to nine months. Yervoy, or ipilimumab, is the first approved therapy to clearly demonstrate that patients with metastatic melanoma live longer.

Analysts see sales reaching $1.2 billion in 2015, according to Thomson Reuters Pharma consensus data.

The drug is an engineered version of a human protein that targets CTLA-4, a molecule that acts like a brake on the immune system.

Investors hope the drug will help Bristol-Myers weather the looming patent expiration on anti-clotting drug Plavix, which it sells with Sanofi.

Also recommended for approval was the first new treatment for lupus in half a century. The companies said the EMA had backed use of Benlysta, discovered by Human Genome Sciences and developed with GlaxoSmithKline, to combat the disease that causes the immune system to attack joints and organs.

Decisions by the London-based drugs watchdog are normally endorsed by the European Commission within two or three months. The green light for Benlysta had been expected, following its approval in the United States in March.

It will take time for sales of Benlysta to ramp up in Europe, as the companies will have to negotiate reimbursement in many countries.

"We would not anticipate meaningful sales until mid-2012," said Mark Schoenebaum, a biotechnology analyst at ISI Group.

Still, Mr Schoenebaum said shares in HGS could rise around $1 on news of the European green light, since some investors had worried that EU approval could be denied, based on the perception that the drug has modest efficacy.

Benlysta's annual global sales are expected to reach $3.55 billion in 2015, according to Thomson Reuters Pharma consensus forecasts. Some analysts predict sales as high as $5 billion in later years.

Reuters