Shares in Irish drug company Elan slumped yesterday after two separate announcements cast a pall over the prospects of Tysabri, its withdrawn drug for multiple sclerosis.

The first was a poll by analysts at Piper Jaffray, which suggested that a majority of the 140 neurologists questioned would be reluctant to prescribe the drug for their MS patients even if it returns to market.

And this was compounded by investor jitters over a scientific report posted on the American Academy of Neurology website, which said the drug caused immune cells in the spinal fluid to fall to levels seen in patients with HIV/AIDS.

Commentators said the AAN study simply showed that Tysabri was exerting the immunosuppressant effects that underlie its mechanism of action in treating MS. But that did not stop Elan’s US-listed shares falling 9% on the day to $12.70, while its commercial partner for the drug, Biogen Idec, also fell 6% to $47.25.

Tysabri was taken off the market in February 2005 after it emerged that three patients taking the drug developed a rare brain disease called progressive multifocal leukoencephalopathy, leading to two deaths.

This was a particularly heavy blow for Elan, which had just emerged from a major restructuring exercise after coming close to bankruptcy in 2002, as Tysabri had been pitched as a potential blockbuster that would transform the company’s fortunes. Likewise, for Biogen Idec the drug was intended to bolster the firm’s MS franchise as its Avonex (interferon beta-1a) product started feeling the effects of increased competition in the marketplace.

Positive NEJM study

On a more positive note, an independent committee review of more than 3,000 people who have been treated with Tysabri, published in the March 2 issue of the New England Journal of Medicine, has found no additional cases of PML.

The results of two Phase III studies published in the same issue of the NEJM also revealed that Tysabri has significant clinical benefits in MS patients over two years of treatment.

Data from the AFFIRM monotherapy study reveal that treatment with Tysabri reduced the risk of disability progression by 42% and led to a 68% reduction in relapse rate compared to placebo. And data from the SENTINEL trial demonstrated that treatment with Tysabri in addition to Avonex had a significant effect on disability progression and relapse rate compared to Avonex alone.

On March 7-8, a US Food and Drug Administration advisory committee is meeting to discuss the possible return of Tysabri to the market. The FDA recently relaxed a clinical hold on the drug, clearing the way for clinical trials of the treatment to resume.