Elan (NYSE:ELN) investors are feeling happy these days, as the company continues its rebound from potential disaster. Yesterday, the Irish drug developer accentuated those good vibes by reporting success in a Phase III trial for Prialt, a severe chronic pain treatment. On that news, Elan shares climbed 13% to $8.02 yesterday, and are up another 3% today.

The company said it expects to file an amendment to its New Drug Application (NDA) with the Food and Drug Administration in the second quarter 2004. Elan also expects Prialt to be on the market by the first quarter 2005.

This injection of good news comes at a good time; damage from the company's mass asset sales distracted from what was an otherwise positive earnings report. Those sales continued into last month, when Elan announced the $120 million sale of its European sales and marketing business.

But things look to be heading the other way. Revenues from continuing operations were up 31% last quarter, and Prialt should help build on that. Plus, Elan has a potential blockbuster waiting in the wings in Antegren, a Multiple Sclerosis treatment. Further, Fool Tom Jacobs expressed earlier that nabbing G. Kelly Martin from Merrill Lynch (NYSE:MER) was the right move to help turnaround the company.

Even given the massive rebound in Elan's share price, the stock may very well still be undervalued. However, as Fool Bill Mann would point out, investors should still be mindful that Elan still "has yet to receive a clean bill of health from the SEC."

Is Elan still undervalued? Is it worth the plunge? Debate it on the Elan discussion board - only at Fool.com. Jeff Hwang can be reached at JHwang@fool.com.