Filed at 6:43 p.m. ET

WASHINGTON (AP) -- Twelve Alzheimer's patients injected with an experimental vaccine are suffering serious brain inflammation.

The vaccine's manufacturer halted the experiment last month when it discovered that the first four patients, all from France, were suffering the encephalitis-like reaction.

Since then, doctors have discovered eight more people with the apparent side effect, which can be hard to distinguish from worsening Alzheimer's, said Bill Thies of the Alzheimer's Association. All 12 are stable or improving, he said.

But the reactions raise serious questions about the future of Elan Corp.'s vaunted vaccine.

Elan excited researchers in 2000 when it discovered that in mice, the compound could ward off and even reduce brain-clogging plaques that are a hallmark of Alzheimer's disease.

Initial safety tests in British patients showed no signs of serious side effects. But because the vaccine works by inducing the immune system to attack the protein that makes up those plaques, called beta amyloid, some scientists had warned that brain inflammation was a potential serious side effect. Thus, participants in the latest 360-patient study were warned about the potential risk, Thies said.

Elan spokesman Max Gershenoff wouldn't discuss the cases but said they are under review by an independent scientific panel appointed to oversee the research.

The study might be able to continue if there were some way to identify who is at highest risk of the reaction, Thies said, but Elan's oversight panel and government regulators would have to agree.

Shares in Elan, Ireland's largest pharmaceutical company, fell Friday on the news. Elan was trading down 5 percent at $13.06 a share in early trading on the New York Stock Exchange.

It's the latest bad news for the firm, which already has seen its stock value slashed by two-thirds in recent weeks. Earlier this month, the Securities and Exchange Commission began investigating Elan's accounting practices after The Wall Street Journal reported the company appeared to be concealing losses in joint ventures, an Enron-style practice that Elan chiefs vehemently denied.