With its woes behind it, the firm is looking to the potential of its MS drug, writes Dominic Coyle.

Even in the middle of what many assumed to be its death throes, the scientists running Elan's research and development programme continued work on the products on which it now hopes to build a successful future.

"The decision to keep spending on R&D, losing hardly any key staff, at a time when thought the company would go under can be characterised either as unbelievably foolhardy or as a statement of firm faith in the future," said one Dublin analyst this week.

For Elan, the ultimate validation of that decision should come next month when it expects to bring its blockbuster drug Antegren to market as a treatment for multiple sclerosis (MS).

Having finally put behind it all the legacy issues from the Geaney era, the company expects to receive approval from the US Food and Drugs Administration before November 25th to begin selling the drug, which it has developed in association with US company Biogen Idec.

Speaking yesterday to The Irish Times, Elan chief executive Mr Kelly Martin explained: "When we started the restructuring, we had a number of themes. We wanted to have financial stability and simplicity and transparency. We wanted to reduce the risk and concentrate on taking our pipeline to the market which, over time, would generate a lot of value.

"I think, on the financial side, we've done pretty much everything we said we would do," he said. "The last remaining pieces on the risk side - the SEC [ Securities and Exchange Commission] and civil litigation - we are putting it behind us. It has been a lot of work by a lot of great people.

"All our energies are focused on delivering our science to patients with unmet medical needs," said Mr Martin. "Today, our emphasis on preparing for a successful launch on Antegren in multiple sclerosis exemplifies our commitment to bringing innovative therapies from the lab to patients around the world."

MS is seen as a fast-growing market for drug therapy. There are currently four treatments vying for a share but, if Antegren can deliver on the results of its clinical trials, it is seen as rapidly becoming the dominant player.

Mr Jack Gorman, analyst at Elan's broker Davy, has pencilled in peak revenues of $2.5-$3 billion for Antegren in the MS market, which is itself expected to grow dramatically in the years ahead.

A number of questions still remain for the company. The first, and most important, according to Dublin analysts, is whether it can deliver on expectations for Antegren.

In a conference call yesterday, company executives said that inspectors from the US and Europe had inspected a plant in North Carolina that is producing the drug and had reported no problems.

Biogen is also building plants in California and Denmark, which are due to come on stream in 2006 and 2008 respectively. Each has the capacity to produce sufficient Antegren to treat 70,000 patients and Elan was confident that production would not be a problem.

Merrion analyst Mr Robert Brisbourne expects Antegren to sell for about $20,000 per patient a year, higher than earlier projections.

A second issue for Elan is the continued success of its pipeline. Apart from Antegren for MS, the company is preparing for the launch of specialist pain therapy Prialt.

In addition, Antegren is being lined up to treat chronic gastro-intestinal disorder Crohn's as well as rheumatoid arthritis. A filing on Crohn's is expected by the middle of next year following completion of a new clinical trial.

The company is also working with Wyeth on treatments for Alzheimer's disease, the first of which is in Phase I trials. Three others are due to begin trials over the next 18 months.

Elan says it also has significant development programmes on Parkinson's disease and other autoimmune disease therapies.

Aside from the pipeline, the resurrection of the group has been largely attributed to the management team that took up the reins following the departure of chairman and chief executive Mr Donal Geaney and finance director Mr Tom Lynch in mid-2002.

Chairman Dr Garo Armen, who originally assumed an executive role, and new finance chief Mr Shane Cooke initially put together the restructuring plan that has proved so successful.

Mr Martin, a recovery specialist, was brought on board in early 2003 and has overseen the financial restructuring without damaging the science that is fuelling its development pipeline of products.

There are fears that, with the SEC investigation out of the way, Elan might come into rivals' view as a takeover prospect. A complicated series of joint ventures on drug development projects will provide some protection as will the Antegren deal that gives Biogen first refusal on any such move.

For Mr Martin, the issue is simple. His job, he says, is "to create value for shareholders" and he doesn't see size as a defining factor. "If anything, recent years have shown that increasing size can decrease value."

The man whose arrival as chief executive was viewed as the prelude to asset-stripping and a firesale has grown into his role to the extent that he is now seen in the market as a key element of the company's future success. It is somehow fitting that this metamorphosis mirrors the passage of Elan from market pariah to responsible member of the biotech community.

At the beginning of 2004, Elan was trading at €5.48 in Dublin. Yesterday, it was at €20.22, a rise of almost 270 per cent against a Dublin market advance of around 14 per cent - the sort of volatility that has made Irish fund managers deeply sceptical about Elan down the years.

"This is still a growth stock but the risk has reduced and that is reflected in the higher price now available to people wanting to get on board," said Goodbody analyst Dr Ian Hunter.

Antegren has been seen as the driving force behind the rise in the share price this year and, while its actual approval would likely give the stock a further boost, it is the sales performance of the company that will become increasingly important.