Sept 2 (Reuters) - Sanofi's most advanced

multiple sclerosis drug candidate has missed the main goal of

two late-stage trials to treat relapsing forms of the disease,

but in a positive surprise succeeded in a study on a less common

form of progressive MS.

Investors focused on the good news, with analysts saying the

trial failure for tolebrutinib in the common relapsing form of

the disease, where isolated flare-ups temporarily subside, had

been widely expected as a similar compound had fallen short.

The shares jumped as much as 4.5% on Monday and were 3%

higher at 0731 GMT, reaching a ten-month high.

"Despite mixed news, tolebrutinib now appears a largely

de-risked perhaps $1-2 billion opportunity," Jefferies analysts

said in a research note.

The French drugmaker said on Monday that two Phase III

trials showed that experimental daily pill tolebrutinib was not

better than its established MS drug Aubagio in reducing relapse

rates in the common relapsing type of MS.

In a mitigation of the setback, Sanofi said a separate third

late-stage trial showed that tolebrutinib met the main goal to

treat a progressive - or steadily worsening - form of MS, which

is less common, and which currently cannot be treated.

In that trial, the Sanofi drug candidate slowed disability

progression when compared with a placebo, an ineffective dummy

drug.

"Tolebrutinib represents an unprecedented breakthrough as a

potential first-in-disease treatment option with clinically

meaningful benefit in disability accumulation," said Houman

Ashrafian, Sanofi's head of research & development.

The company added it would discuss those results with

regulators, aiming to file for approval by the end of 2024.

Sanofi is pursuing several opportunities in MS, a

debilitating nerve disease, to offset revenue losses after the

recent end of the Aubagio pill's patent protection, part of a

push to become a powerhouse in anti-inflammatory drugs.

CEO Paul Hudson has been trying to regain investor

confidence in the pharma pipeline since he unexpectedly

abandoned 2025 margin targets last October to boost drug

development spending.

Shares have bounced back somewhat over recent months on the

strength of drug launches including Beyfortus to protect infants

against a common respiratory infection.

Tolebrutinib, from the $3.7 billion takeover of Principia in

2020, belongs to a class of compounds known as Bruton's tyrosine

kinase (BTK) inhibitors, which has also attracted Novartis

, Roche and Merck.

They are designed to selectively block the harmful

autoimmune reaction behind MS for a more targeted approach than

standard immunosuppressant drugs.

Investors however have been kept on edge over revenue

prospects because of a possible link to liver damage and

uncertain efficacy.

In 2022, concerns over liver damage led to a halt in the

enrolment of new patients in three of Sanofi's tolebrutinib

studies that were still recruiting volunteers at the time.

On Monday, Sanofi only said liver safety was consistent with

previous studies, with more data to be disclosed on Sept. 20.

Merck's BTK inhibitor last December failed to beat

off-patent Aubagio on efficacy in MS trials, hitting confidence

in the wider drug class.

Roche subsidiary Genentech is still in the race, but safety

concerns also emerged last November. Rival Novartis has said its

BTK drug candidate had shown no signs of liver damage.

Sanofi on Monday only provided a brief summary of the

trials, holding off details for a medical conference in

Copenhagen on Sept. 20.

Another Phase III study known as PERSEUS in another

progressive form of MS is still ongoing, with results expected

in 2025, Sanofi added. The French group is also working on MS

candidate frexalimab in earlier development stages.