Shares in Irish biotech group Elan fell yesterday after European regulators recommended against the use of its multiple sclerosis drug Tysabri as a treatment for the bowel disorder Crohn's disease.
Elan shares were down almost 6 per cent at €14.64 as trading closed in Dublin. In New York, where much of the dealing in Elan takes place, the shares were 3.7 per cent weaker last night.
The European Medicines Agency said on Thursday the risk of serious infection outweighed the relatively modest benefit of Tysabri for Crohn's patients.
Elan, which reports second-quarter results next week, and US partner Biogen, said they will appeal the decision and expect a ruling on the appeal by the first quarter of 2008.
Davy Stockbrokers said the Crohn's indication for Tysabri accounted for just $1 in analysts' overall revenue-based sum-of-the-parts valuation and the European regulators' decision was therefore not a huge blow.
"However, it does hurt sentiment ahead of the FDA advisory panel meeting on July 31st to consider the US application in Crohn's," it said in a note to investors.
Merrion stockbrokers said it remained a possibility that Elan could be successful in its appeal. "In any case, in our view it is progress in MS [ multiple sclerosis] . . . that will be the major driver of Tysabri sales."
Goodbody analyst Ian Hunter said that he had always believed that, given the efficacy of the drug, the safety profile and the other drugs on the market for Crohn's, "the use of Tysabri to treat the disease would be marginal, at best". - (Reuters)
