Elan shares rise after comment on drug

Shares in Irish biotech company Elan have risen sharply on the back of positive comment about an Alzheimer's drug involved in a discontinued clinical trial.

Two academic papers published this week in the journal Neurology say that the drug, produced in conjunction with Wyeth, may have done the patients some good.

The shares jumped 9.5 per cent on Tuesday and a further 6.2 per cent yesterday to $7.33 towards the end of New York trade as investors interpreted the data as indicating that Elan and Wyeth were some way towards developing a treatment for the disease.

However, Dr Ian Hunter, analyst with Goodbody Stockbrokers, said the papers were based on data that had already been presented in July 2004 to the 9th International Conference on Alzheimer's Disease.

"The papers, however, not only renewed investor awareness of the AN-1792 programme, they also gave scientists an opportunity to highlight the ongoing trial with AAB-001, the latest proposed Alzheimer's treatment which is currently going through Phase II trials," he wrote in a note to clients.

The Phase III trials of the experimental treatment - AN1792 - were abruptly halted in January 2001 when 18 of the 300 patients testing the drug developed meningoencephalitis, a life-threatening inflammation of the brain.

The announcement, which came against a background of expectation about Elan's Alzheimer's programme, was the catalyst for a dramatic collapse in the company's share price from $45 to the mid-teens.

Shortly after, questions raised in the US media about its accounting practices further undermined the companies.

Shares in Elan have been volatile this year following another collapse at the end of February following the withdrawal of its blockbuster treatment for multiple sclerosis.

The Neurology papers presented follow-up data on the patients involved in the trial. Researchers said there was evidence that the treatment did help clear some of the "plaques" that characterise the brain disease.

Some of the trial patients improved their scores on memory and a number of other tests used to chart progress of the disease.

"We now need to see whether we can create an immune response safely and in a way that slows the progression of Alzheimer's disease and preserves cognition," said Dr Sid Gilman, of the University of Michigan Medical School, who led one of the studies. Additional reporting: Reuters