Elan shares rise on plans for MS drug

Elan stock raced forward again yesterday after it announced plans to apply this summer for European approval for its key drug, Antegren, as a treatment for multiple sclerosis (MS).

The shares were also boosted by a strong report from Morgan Stanley, which resumed coverage of the stock with a target of $30.

Elan shares closed at $19.70 in New York yesterday, up from $18.40 overnight but down on the $20.51 they hit shortly after trading opened.

Elan and Biogen Idec, with whom it is developing Antegren, said they would submit an application to the European Agency for the Evaluation of Medicinal Products on Antegren following discussions with officials at the European regulator. The application will be made on the basis of one-year data from an ongoing clinical trial of the drug.

The firm has said it will complete the two-year trial and will not publicly divulge the interim figures until then. Those figures are expected in October.

The European application follows a similar move in the US last month. Analysts said the move, while not a surprise, was a "further strong vindication of the strength of the one-year data".

Davy analyst Mr Jack Gorman said: "The signs are positive that Antegren will become a gold standard in the MS market, with a superior safety and efficacy profile to existing therapies."

Estimates of the size of the MS market vary. It is put at $3.2 billion and growing at the rate of 15 per cent a year.

Biogen estimates, however, that about half of all MS patients are not taking available drugs because of adverse side effects. That would indicate a target market of $5-$6 billion.

NCB analysts Mr David Marshall and Ms Orla Hartford said the European MS market was less "penetrated" than the US and "Antegren has the opportunity to significantly expand the market in Europe" if the product was as reliable as the early filing suggested.

Elan is also testing Antegren as a treatment for chronic bowel disorder Crohn's and rheumatoid arthritis.

Morgan Stanley's Mr Marc Goodman said yesterday that investors were underestimating Antegren's potential.

Morgan Stanley has traditionally been critical of Elan but Mr Goodman says the company's management "has the ability to build a successful integrated pharmaceutical and biotechnology company".

He praised their streamlining of the company's balance sheet and the restructuring of its operations and was upbeat about the investigation by the US Securities and Exchange Commission.

At the end of last year, Elan was trading at $6.89 and its rapid rise in the first quarter of 2004 is attributable largely to increasing investor confidence in the prospects of Antegren.