FDA to Review Tysabri on March 7

Copaxone rival could make a comeback, albeit with warnings

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By Paul Hoskins, with TheMarker

Doomsayers predicting the demise of disgraced multiple sclerosis drug Tysabri were premature. U.S. regulators will hold a meeting on March 7, 2006 that will be crucial to deciding the fate of the suspended drug Tysabri and the future of its developers, Elan Corp and Biogen Idec (Nasdaq: BIIB).

Tysabri had been touted as serious competition to Teva Pharmaceuticals' (TASE, Nasdaq: TEVA) drug Copaxone. For one thing, Tysabri was more convenient to administer ? a once-monthly injection compared with a daily one for Copaxone. On the other hand, Tysabri had to be administered at a clinic while patients could handle the Copaxone injections alone at home.

Anyway, Tysabri had been yanked in February 2005 from drugstores, clinics and even clinical trials after being implicated in the development of a deadly viral disease attacking the brain, that killed at least one patient taking the drug.

The FDA revisit to Tysabri had been widely expected, partly based on the drug?s efficacy and convenience of use. Yet shares in Elan fell as much as 10% in Ireland after a steep drop in the United States late on Friday: analysts warned that market jitters over the drug's future could increase in the run up to the meeting.

Ireland-based Elan and its U.S. partner said in a statement on Monday that an FDA panel of neurologists and other experts would meet on March 7 to weigh the risks of bringing the MS treatment back to market.

Tysabri, which was withdrawn after a fatal case of the rare brain and spinal-chord infection, progressive multifocal leukoencephalopathy (PML), is seen as key to restoring Elan's fortunes after a brush with bankruptcy in 2002.

Two further cases of PML later emerged, one of them fatal.

The virus normally lives in most people, but can be activated after immune system trouble.

"While overall we would expect this panel to recommend to the FDA the re-launch of Tysabri, the risk of negative commentary ahead of the panel's decision could generate negative sentiment and weak share price performance," analysts at NCB stockbrokers wrote in a morning note to clients.

Biogen, which unlike Elan is profitable, is less dependent on the drug, but investors in both firms will watch the meeting closely given that the treatment had been seen as a potential blockbuster with total sales running into billions of dollars.

Priority review

Shares in Elan, which have been highly volatile prior to an announcement on Tysabri's fate, fell as traders also said the stock was reacting to a 6.9 percent drop in the United States on Friday after European markets closed.

"The news out there this morning is positive," said one Dublin-based trader. "But the shares are catching up with a sharp fall in New York late on Friday and obviously the markets are generally negative."

Late last year the FDA gave Tysabri a priority review, usually an indication that the watchdog believes the drug has the potential to perform significantly better than existing therapies.

Should Elan and Biogen get the green light to re-launch Tysabri, analysts expect the FDA will attach certain conditions such as clearer labeling on possible side effects or limits on using the drug in conjunction with other therapies.

"The topics for discussion will include product risks, efficacy, a possible return to the marketplace and the proposed risk management plan," Jack Gorman, analyst at Davy stockbrokers said in a research note. "These are as we would have expected."



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