Oct. 15 (Bloomberg) -- Acorda Therapeutics Inc. rose the most in three years in Nasdaq trading after a U.S. panel supported approval of its pill to improve walking in patients with multiple sclerosis.

The company rose $7.91, or 47 percent, to $24.65 at 4 p.m. New York time in Nasdaq Stock Market composite trading. It was the shares’ biggest gain since they tripled on Sept. 25, 2006.

Outside advisers to the Food and Drug Administration said yesterday that the benefits of Acorda’s fampridine-SR outweigh the risk of seizure and other side effects. The twice-daily pill restores nerve signals that cause MS symptoms such as loss of mobility. Current drugs, led by Teva Pharmaceutical Industries Ltd.’s Copaxone and Biogen Idec Inc.’s Avonex, are shots that reduce relapses and prevent the disease from getting worse.

“With visibility on the drug’s regulatory prospects now much improved, we expect shares to outperform the market by 50- 100 percent as investors gain confidence in Fampridine’s commercial opportunity,” said Phil Nadeau, an analyst at Cowen & Co. in New York, in a note to clients today. He estimates annual sales of fampridine will reach $450 million by 2013.

While the FDA usually follows the advice of its panels, it isn’t required to do so. The agency is scheduled to make a decision on Acorda’s new drug application by Oct. 22. Many analysts expect a delay until the end of the year or the first quarter of 2010 to give regulators more time to review the panel’s recommendations and work with Acorda on a plan to minimize fampridine’s risks.

‘Best Case’ for Acorda

Fampridine is Acorda’s leading drug in development. The Hawthorne, New York-based company fell 21 percent in trading on Oct. 9, the most since Acorda’s initial public offering in 2006, after an FDA staff report raised questions about whether the drug’s benefits were clinically meaningful.

The panel’s recommendations were a “nearly best case scenario” for Acorda, Mark Schoenebaum, an analyst at Deutsche Bank in New York, said today in a note to clients. The advisers voted 12-1 that the company should evaluate a dose lower than the proposed 10-milligram tablet and 10-2 with one abstention that the research could wait until fampridine was approved.

More than 2.5 million people worldwide and 400,000 people in the U.S. have MS, according to the National Multiple Sclerosis Society. Damage to myelin, the protective sheath around nerve cells in the brain and spinal cord, causes muscle weakness, trouble with coordination and critical thinking, and memory loss. Women are at least twice as likely as men to get the disease.

Began With Elan

Development of fampridine was started by Dublin-based Elan Corp. in the early 1990s and licensed by Acorda in 1998. The drug is a sustained-release form of 4-aminopyridine, which some MS patients now get from compounding pharmacies with a doctor’s prescription. These medicines are custom made for patients and overdoses can cause seizures and other side effects.

On average, fampridine helped 32 percent of patients walk at least 20 percent faster in a 25-foot test, compared with 13 percent on a placebo pill, according to Acorda’s studies. While the 10-milligram proposed dose wasn’t shown to increase the likelihood of seizure, regulators raised concerns about the potential risks from higher levels of the drug in the blood.

Elan would manufacture fampridine and receive royalties on sales. Acorda plans to distribute the drug through specialty pharmacies and has proposed calling the drug Ampriva. The company now sells Zanaflex capsules, a product it acquired from Elan in 2004, to treat spastic muscles.

Cambridge, Massachusetts-based Biogen agreed in July to pay as much as $510 million for rights to market fampridine outside the U.S. Biogen said Sept. 22 that it plans to apply in the first half of 2010 for European approval.

To contact the reporter on this story: Catherine Larkin in Washington at clarkin4@bloomberg.net

Last Updated: October 15, 2009 16:21 EDT