Shares in Elan surged by more than 11 per cent yesterday as hopes grew that its suspended multiple sclerosis drug might be moving closer to a return to market.
The US Food and Drug Administration (FDA) is due to decide by November 26th whether or not to fast-track its review of Tsyabri, which was withdrawn earlier this year after it was linked to two fatalities.
The company has requested a priority six-month review of the drug, rather than the standard 10-month review. It should know next week if its request has been granted.
"There is growing optimism building around November 26th," said Jack Gorman, analyst at Davy Stockbrokers.
Last week, US brokerage firm AG Edwards upped its rating on shares in Elan to "hold" from "sell", citing rising hopes that Tysabri would return to market.
Elan shares jumped by 91 cent, or 11 per cent in Dublin yesterday to close at €8.99 while they were up by 1.79 per cent to $10.25 (€8.74 ) in New York, building on Monday's 7 per cent gain.
Dealers said the upward move in the stock was exaggerated by investors with short positions who scrambled to buy shares to cover their positions.
Elan, which is developing Tysabri with its US partner, Biogen Idec, was forced to withdraw the drug after three cases of progressive multifocal leukoencephalopathy (PML), a potentially fatal brain disorder, were discovered in patients on the treatment.
