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New Data on Elan-Biogen's Tysabri

Zacks Equity Research

Elan Corporation (ELN) and partner Biogen Idec (BIIB) recently presented data from 11 company-sponsored Tysabri (natalizumab) studies at the European Committee for Treatment and Research in Multiple Sclerosis (:ECTRIMS).

Notably, Biogen and Elan have an agreement for the development and commercialization of Tysabri. Under the terms of the agreement, Elan markets the drug in the US and books the entire sales as its revenues. Outside the US, Biogen is responsible for distribution and Elan records its share of the profit or loss on these sales of Tysabri as revenue. This collaboration agreement provides Elan with the option to buy the rights of Tysabri if Biogen changes hands.

Important Study Results

Elan and Biogen presented positive results from Tysabri Observational Program (:TOP), which is evaluating the long-term safety and efficacy of the drug along with two-year freedom from clinical disease activity in patients suffering from multiple sclerosis (MS).

The companies also presented results from the TYNERGY trial of Tysabri. The results from this study showed that Tysabri treatment resulted in a significant reduction in fatigue. Moreover it also helped in improving the health-related quality of life (HRQoL).

Elan and Biogen also declared positive results from the AFFIRM study of Tysabri. The results showed that 37% of the patients treated with Tysabri were free of clinical and radiological disease activity over the study period.

Our Take and Recommendation

Tysabri is the principal growth driver at Elan. As per Elan, Tysabri global net sales in the second quarter of 2012 were $395.5 million. We note that Tysabri is approved in the US for relapsing forms of multiple sclerosis (MS) in patients who show inadequate response to or are unable to tolerate other treatments. In the EU, Tysabri is approved for highly active relapsing-remitting MS (RRMS) in adult patients who have severe RRMS or have failed with beta interferon treatment.

In the EU, Tysabri was approved in 2006, while in the US, it was initially approved in 2004. The product was withdrawn from US markets in 2005 due to the progressive multifocal leukoencephalopathy (PML) concern. The drug was reintroduced by Biogen and Elan after a year with a strict warning regarding the occurrence of PML.

We currently have a Neutral recommendation on both Biogen and Elan. While Biogen carries a Zacks #2 Rank (Buy rating) in the short run, Elan carries a Zacks #3 Rank (short-term Hold rating).

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