UPDATE 3-Acorda Therapeutics scraps Parkinson's drug after deaths

* Last week company reported five deaths in tozadenant studies

* Outright discontinuation of tozadenant is "smart"- Leerink

* Shares jump as much 10.4 pct (Updates share price, adds analyst comment)

Nov 20 (Reuters) - Acorda Therapeutics Inc said on Monday it would stop developing its Parkinson's disease drug, tozadenant, less than a week after the company reported deaths in key studies testing the treatment.

The company's shares, which had fallen about 40 percent since it reported deaths of five patients, were up 9 percent at $19.40.

Leerink Partners analyst Paul Matteis said the outright discontinuation of tozadenant program was "smart", as the focus fully shifts to Acorda's other Parkinson's drug in development, Inbrija.

The discontinuation of tozadenant should conserve some cash, which is a key consideration as the company will soon refile Inbrija marketing application, Matteis said.

The company, which acquired tozadenant last year with its $363 million Biotie Therapies buy, is also developing SYN-120 to treat Parkinson's disease.

It is the latest setback the company has encountered this year including the loss of exclusivity on its flagship multiple sclerosis drug Ampyra and the U.S. regulator's refusal to review Inbrija.

Last week, Acorda said it had found seven cases of sepsis in patients taking tozadenant in mid- and late- stage trials, four of which were associated with agranulocytosis the absence of white blood cells.

The drugmaker on Monday said it was not confident that the weekly screening of white blood cell count would be sufficient to ensure patient safety.

The company, which had been pinning hopes on the success of tozadenant, had initially planned to stop enrolling patients in two safety studies, and increase the frequency of blood cell count monitoring in patients to weekly, in an ongoing trial.

Stifel analyst Thomas Shrader said Parkinson's drugs with even a small probability of serious side effects are rarely used.

"The decision not to continue development was probably influenced by the commercial prospects of a drug with these properties," Shrader said.

Acorda said it still expects to report data, from over 90 percent patients that have completed the late-stage study testing the drug, in the first quarter of 2018. (Reporting by Divya Grover and Akankshita Mukhopadhyay in Bengaluru; Editing by Shounak Dasgupta)