Irish pharmaceutical company Elan has slumped to a fourth quarter loss, but bosses remain confident the firm will bounce back in the next 12 months as sales for its multiple sclerosis drug, Tysabri, grow.

The Dublin-based company posted a net loss of almost 42 million euro, compared to a 122.9 million euro profit in the final quarter of 2008. - an income boosted by a 170 million euro tax refund.

Company bosses expect Elan to record a healthy operating profit for 2010 as sales of its Tysabri product, distributed in cooperation with US drugmaker Biogen Idec, continue to grow.

The drug is an industry-leading suppressor of the paralysing and crippling effects of multiple sclerosis.

American and European regulators permit Tysabri to be used as treatment only in the most severe MS cases, because the drug has been linked to a risk of developing a rare, often fatal brain-inflammation disease called PML.

Elan's fourth-quarter sales rose 11.2% to 217.5 million euro, reflecting a 37% growth in Tysabri sales in its key US and European markets.

The company has been through some large changes in the last year, selling an 18.4% stake to Johnson & Johnson in September. The deal saw the healthcare giant acquire the rights to the firm's promising but expensive research into Alzheimer's.

Elan's fourth-quarter operating expenses fell 10.9%, chiefly because of a 36% decline in research and development expenses following the sale of its Alzheimer's research projects to J&J.

Elan said the J&J cash had allowed it to slash its net debt by 53% to 507.5 million euro and refinance its remaining liabilities, admittedly at higher interest rates, but with full repayment not due until 2016.

Elan shares rose 1% on the Irish Stock Exchange after the results were announced.