Biogen, Elan Drug Gets New FDA Warning

The Food and Drug Administration on Monday said it was expanding its label warning of potentially deadly brain infections for patients taking Biogen Idec(BIIB Quote) and Elan's(ELN Quote) multiple sclerosis treatment Tysabri.

Tysabri was previously removed from the market after being linked to progressive multifocal leukoencephalopathy (PML), but was relaunched with a warning on its label. News of the drug's connection to two confirmed cases of PML since its approval in the European Union and the re-entry into the U.S. market two years ago in July hit shares of companies. Biogen fell 26% and Elan plummeted 45% after the cases were disclosed.

On Monday, the FDA said the label will now include the risk of progressive PML with Tysabri when it's used alone. PML is a known risk of Tysabri, but previous cases in patients with MS were seen in combination with other therapies that affect the immune system. Regulators said they still believe Tysabri monotherapy may have a lower risk of PML than when the drug is used with other immunomodulatory medications.

"We view the label change as relatively minor and believe it reflects the FDA's support for continued Tysabri use," wrote Thomas Weisel Partners' analyst Ian Somaiya in a note Monday. The analyst expects sales could continue to beat estimates, but maintained a market weight rating "given our concern for further downside risk if and when PML cases are confirmed in the U.S."

The two recent cases occurred after 17 and 14 months of treatment, respectively, both in Europe. Biogen said Tuesday that as of Aug. 25, both were clinically stable.