Irish drugmaker Elan narrowed its losses in the second quarter of 2006, and said that the recent re-launch of multiple sclerosis drug Tysabri would swing it into profit.

Elan reported an operating loss of $51 million, down from $55 million a year earlier, on revenues up 15% to $136 million. Net losses were slashed 37% to $77 million, and shares in the company rose nearly 5% in mid-morning trading as investors digested the figures.

Tysabri (natalizumab) has now been returned to the market in Germany, Ireland, the UK, Sweden and the USA, having been withdrawn last year over links to a rare but life-threatening adverse reaction affecting the brain. Opinion differs as to how big a product Tysabri will become with this issue lurking in its past, but a number of analysts believe that it could yield more than $1 billion a year at peak, and maybe even approach $2 billion.

Elan’s other products brought in sales of $66 million, with antibiotic Maxipime (cefepime HCl) up 7% to $43 million. Azactam (aztreonam), another antibiotic, rose 35% to $20 million, despite the loss of patent protection in October 2005. No generic form of the latter drug has yet been approved, said Elan. Severe pain treatment Prialt (ziconotide) brought in $3 million, up from $1.8 million in the second quarter of 2005 when it was launch in the USA. Eisai bought worldwide rights (excluding the USA) to Prialt from Elan earlier this year.

Manufacturing revenue grew by 19% to $48 million, while contract drug development revenue dropped 20% to a little under $6 million. The latter is expected to pick up later in the year following an agreement to use Elan’s formulation technologies in a new combination cholesterol-lowering product using AstraZeneca’s Crestor (rosuvastatin) and Abbott Laboratories’ TriCor (fenofibrate).