Another Setback for Tysabri

Shares of Biogen Idec (BIIB) and Elan (ELN) fell Thursday after a newspaper said a fourth case of a rare, often fatal brain disease might be linked to their now-withdrawn drug for multiple sclerosis, Tysabri.

The Boston Globe reported in Thursday's edition that Biogen Idec has informed the Food and Drug Administration that another patient may have contracted the rare central nervous system disease, known as PML, after having taken Tysabri and another MS drug, Avonex, made by Biogen Idec.

Biogen Idec and Elan announced on Feb. 28 that they were suspending sales of Tysabri after clinical trials revealed that two patients had contracted the disease. A review of clinical trial records later identified a third patient. Two of the patients died.

Ever since they announced the drug's suspension, the companies have been examining patients' records for other instances of PML, whose formal name is progressive multifocal leukoencephalopathy. They will present their findings to the FDA in a few months and then discuss the circumstances under which Tysabri might return to the market.

Biogen Idec's stock fell $1.60, or 4%, to $38.17 in late morning trading Thursday. The stock dropped as low as $37.70. The more volatile shares of Elan dropped $1.20, or 15%, to $6.79. The stock dropped as low as $6.08. Shares of both companies traded heavily.

The much smaller Elan is heavily dependent on Tysabri. Its stock falls sharply whenever bad news emerges, and it lurches forward if there's a hint of good news. Last week, the stock jumped after Kelly Martin, the chief executive, predicted at Elan's annual meeting Tysabri could be back on the market after the FDA completes its review this summer and discusses its findings with the companies.

This isn't the first time Martin has expressed optimism. Just after the companies pulled the drug, he told analysts a "realistic timeline" would be a third-quarter return to the market. Executives at Biogen Idec have said they are hopeful that the drug would return.

Comeback Conundrum

Each case of PML weakens the chance that Tysabri will reappear on the market. The drug has shown considerable promise in treating MS, and the Boston Globe says the FDA is reviewing this new information.