Shares in drugs company Elan jumped by 18.6 per cent yesterday after it announced plans to initiate phase three clinical trials of a drug that is being developed with Wyeth Pharmaceuticals to treat Alzheimer's disease.

Final-stage clinical trials of the drug bapineuzumab, for the treatment of patients with mild to moderate Alzheimer's disease, are expected to start in the second half of this year after the clinical trial design is finalised with regulatory authorities.

This means the drug's development is running about a year ahead of schedule, with the start of the trial process advancing to mid-2007 from mid-2008.

The two companies said the decision to launch the phase three trials was taken in light of the seriousness of the disease and interim data from the ongoing phase two study.

"No conclusion about the phase two study can be drawn until the study is completed and the final data are analysed and released in 2008," the firms said in a statement. "It is important to remember that Alzheimer's disease is a complex and formidable challenge, and our immunotherapeutic programs still contain inherent risks."

Elan's previous experimental Alzheimer's treatment AN-1792 was withdrawn from trials because of dangerous side effects in January 2002. Nevertheless, the latest news on bapineuzumab was greeted positively by the markets, with around 1.2 million shares in the stock traded in Dublin.

"This is a very positive development for both Elan and Wyeth, given that the acceleration of the drug into a phase three study was only going to be considered if the interim data showed a significant improvement in patient progress," said Ian Hunter of Goodbody Stockbrokers.

He said the phase two trial was potentially pivotal and data could be used to apply for approval in the US on a symptomatic basis.

"If significant data were available in early 2008, this could imply an application to the [ US regulator, the Food and Drug Administration] FDA by mid-year and approval in late-2008. This, however, is the best-case scenario," he said.

This is one of a number of Alzheimer's programmes being undertaken by Elan and Wyeth, with the two companies sharing all costs and potential revenues for the collaboration equally.

Elan shares closed last night at €13.87 in Dublin.