Unconfirmed PML Cases Dent Biogen, Elan

As of the end of June, more than 31,800 patients were on commercial and clinical Tysabri therapy worldwide. Deutsche Bank analyst Mark Schoenebaum estimates that there are 14,000 patients who have been on the drug for more than a year. Considering there have been four PML cases observed in MS patients and one in a Crohn's disease patient, it is not in excess of the rate indicated on the label.

Still, despite the fact that PML is a known risk-factor with Tysabri, Jeffries analyst Adam Walsh, like Citi's Werber, says that a survey he's conducted suggests that two new cases of PML would lead to an abrupt and sustained decrease in Tysabri use amongst MS doctors.

The survey shows a relatively steep drop-off in Tysabri use with each additional new case of PML. This is in contrast to consensus belief that physicians will be comfortable using Tysabri so long as the rate of PML is no greater than described in the label (i.e. 1/1000), writes Walsh. The analyst has a hold rating on the stock and decreased his price target to $50 from $71.

The company said on the Friday call that its guidance for 100,000 patients on the drug by 2010 -- which Wall Street has already viewed as ambitious -- does include expected cases of PML as is indicated on its label.

"We have [the] TOUCH safety program in the U.S. and we have a risk management program in Europe, and we've done a lot of work to make sure that treating physicians know how to spot signs of it," says Aoki. "Our feeling has been that heightened clinical vigilance is the best way to monitor for PML and that certainly was the case with these two patients."

Tysabri isn't alone when it comes to instances of PML. There have been a number of other immunosuppressant drugs linked to PML, notes Summer Street's Carol Werther, including Genentech (DNA Quote) and Biogen Idec's Rituxan. Also, the Food and Drug Administration issued a communication on May 29, following a review of postmarketing reports of PML in patients who took Roche's CellCept and Novartis' (NVS Quote) Myfortic, drugs used to keep the body from rejecting transplant organs.

Meanwhile, as Elan and Biogen got hammered further Friday, shares of Teva Pharmaceutical (TEVA Quote) -- which markets Copaxone, an MS drug with a different mechanism of action from Tysabri -- got a nice boost, climbing $1.49, or 3.3%, to $46.22 in recent trading Friday.