Hopes of a swift recovery in the fortunes of drug company Elan were dashed yesterday after it emerged that a third patient taking part in drug trials had contracted a usually fatal illness - progressive multifocal leukoencephalopathy (PML).
The company's shares fell by half as hopes of a speedy return to the market by Tysabri, the drug in question, receded. Sales of Tysabri were voluntarily suspended a month ago following diagnosis of two cases of PML.
The patient, who had been part of a group testing Tysabri as a treatment for Crohn's Disease, a chronic gastro-intestinal condition, died in 2003.
Initially, it was thought that the patient had suffered brain cancer but a review of data in the wake of the suspension of Tysabri last month revealed that the patient had contracted PML.
Analysts questioned whether Tysabri, the drug on which Elan had planned its future, would ever return to market and, if so, when.
The previous cases of PML had occurred in patients suffering from multiple sclerosis who were taking Tysabri in trials in conjunction with another drug, the immunosuppressant Avonex. One of those has died.
The latest case is the first of a patient taking part in a trial of the efficacy of Tysabri on its own. However, the dead patient had been separately taking an immunosuppressant with a known link to PML for some time.
Analysts reacted immediately to the news, downgrading Elan, and questioning whether Tysabri had any future.
US broker Piper Jaffray, which only last week published a generally positive note on the company, said yesterday: "We can no longer feel comfortable recommending shares of Elan, even for the most risk tolerant investor."
Merrion analyst Robert Brisbourne wrote in a client note: ""A third case of PML significantly reduces the likelihood of Tysabri returning to market."
Elan said yesterday that it was still working to resume sales of Tysabri sometime next year. However, the company appeared for the first time to acknowledge that Tysabri was not going to be a blockbuster treatment for multiple sclerosis, Crohn's and rheumatoid arthritis, saying it was doing everything possible to make the drug's benefits "safely available to certain segments" of patients with these conditions.
The latest setback for Tysabri has raised concerns about the ability of Elan to pay back debt. Goodbody analyst Dr Ian Hunter said the group would need to restructure to cut costs.
The chief executive of Multiple Sclerosis Ireland, Graham Lowe, said Irish MS patients had been hoping Tysabri's problems were purely down to its combination with Avonex. "This is very disappointing news for people with MS in Ireland," he said.
A spokeswoman for Elan said the latest news would not affect the group's manufacturing operation in Athlone. She pointed out that Tysabri was manufactured by Elan's partner Biogen. The Athlone workforce was engaged in other parts of the business.
