Demand for Tysabri has been curtailed due to concerns over its association with a potentially fatal infection known as progressive multifocal leukoencephalopathy, or PML, which is caused by the JC virus.

Now, however, there is a test for the virus to predict if patients are at risk of developing PML, opening the possibility that Tysabri could be used more widely and at an earlier stage of treatment.

Biogen and Elan said on Wednesday they had submitted applications to the U.S. Food and Drug Administration and the European Medicines Agency seeking approval for first-line use in patients with relapsing forms of multiple sclerosis (MS) who have tested negative for antibodies to the JC virus.

The JC virus is generally harmless, but in people with weakened immune systems, such as those using immune system-suppressing drugs like Tysabri, it can lead to an increased chance of developing PML.

Tysabri use is currently limited to between 10 and 12 percent of treated MS patients, due to the risk of PML, and analysts said the hoped-for wider approval would improve uptake and send a positive signal to doctors.

Berenberg analysts said Tysabri's share of the MS market could increase to about 15 percent by 2015, representing sales of $2.9 billion, while today's share price for Elan implied peak sales of only some $2 billion.

Tysabri was briefly pulled from the market over PML concerns - but it was considered to be so effective, compared with other available treatments, that MS patients argued the risk was worth taking and demanded its return.

Health regulators bowed to the pressure and allowed the drug's relaunch with restrictions.

"A first-line approval would allow people with MS access to a highly efficacious treatment earlier in the course of the disease, potentially leading to better outcomes," said Alfred Sandrock, Biogen's chief medical officer.

"This is an important consideration for people with MS who may want or need more efficacy."

Both the U.S. and European regulators are expected to decide on the applications for first-line use later this year.

(Reporting by Ben Hirschler; Editing by Louise Heavens)

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