Drugs giant Elan has lost over half its share value on the Irish stockmarket in early trading on Saturday after its popular Tysabri multiple sclerosis drug was linked to two new brain disease cases.

Elan shares have plummeted in early trading in the capital as a result of the news that the potentially deadly conditions are linked to the drug -- dragging the overall ISEQ index level down by almost 8pc.

Multiple sclerosis drug Tysabri, which is used by 31,800 people worldwide, was previously withdrawn in 2005 after the side-effect was discovered during trials of the drug.

Elan had earlier this year said it hoped to make a profit in 2010 because of expectations that as many as 100,000 patients could be using the medication within the next two years.

But after the latest concerns over the drug were raised, Elan, which is the second biggest company on the Irish stock market, is now facing the reality of a huge financial hit over the side-effects concerns.

Regulators in the US and the EU had previously licensed the use of Tysabri on a restricted basis after an earlier Tysabri scare in 2005.

On that occasion, two of the patients died.

Since 2006, the numbers prescribed the drug have been steadily increasing, with investor confidence returning to the company. Despite its problems, among MS patients the drug is seen as a huge medical breakthrough.

In May, Elan said that an estimated 31,800 patients worldwide are currently receiving Tysabri.

At the time the company also said that it expected to make a profit in 2010 thanks to growing sales of the drug, with 100,000 patients on Tysabri therapy targeted by the end of 2010.