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UPDATE 4-Acorda reports five deaths in Parkinson's trial, shares plunge

* 5 patients died in trials

* Analysts flag concerns about drug's future

* Shares tank nearly 40 pct (Recasts, adds CEO and analyst comments, updates shares)

Nov 15 (Reuters) - Acorda Therapeutics Inc said five people died in trials for its Parkinson's disease drug, the latest in a series of setbacks for the drugmaker, sending its shares down 38 percent.

Acorda was pinning its hopes on the success of the drug, tozadenant, as it copes with the loss of exclusivity on its flagship multiple sclerosis drug Ampyra and the U.S. regulator's refusal to review its other Parkinson's disease drug, Inbrija.

The company said it would stop enrolling patients for two long-term safety studies on tozadenant after it found seven cases of sepsis, a life-threatening infection, in mid- and late-stage trials.

Four of the sepsis cases were associated with agranulocytosis - the absence of white blood cells.

"Investors will hold a more distressed view of the drug's odds of success and commercial potential as a byproduct of the update today," Leerink Research analyst Paul Matteis said.

Six patients died during the mid-stage trial but there was no suspicion at the time that these cases were related to the drug, Acorda Chief Executive Ron Cohen told Reuters.

The drugmaker said on Wednesday it would increase the monitoring of blood cell counts in patients in an ongoing late-stage trial to weekly, instead of every two weeks, monthly and once in a three-month assessment.

"Today's headline ... raises the bar substantially on what efficacy will need to look like to drive meaningful use," J.P.Morgan analyst Cory Kasimov wrote in a note.

Tozadenant, which the company acquired last year when it bought Biotie Therapies for $363 million, belongs to a new class of drugs called A2a receptor antagonists that can help improve motor symptoms in patients with Parkinson's disease.

Analysts said the safety issues with the drug were unexpected and come at a crucial juncture for the drugmaker as it braces for looming generic competition to Ampyra.

Investors have called for the company to sell itself after a judge in March struck down key patents of Ampyra - its only drug on the market - that brought in $133 million in the third quarter.

Acorda said on Wednesday it continues to expect to report data from the late-stage trial in the first quarter of 2018.

The resubmission of the marketing application for the company's Inbrija is expected in the current quarter.

Acorda's shares were down 38 percent at $17.48 by midday.

(Reporting by Divya Grover in Bengaluru; Editing by Bernard Orr and Saumyadeb Chakrabarty)