Updated from 9:44 a.m. EST

Shares of

Biogen Idec

(BIIB) - Get Report

and partner

Elan

(ELN)

plunged Monday after the companies pulled their much-hyped multiple sclerosis drug Tysabri from the market.

The companies said one patient died after taking Tysabri for two years in combination with Avonex, while a second is suspected of developing the rare and often fatal central nervous system disease progressive multifocal leukoencephalopathy, or PML.

Biogen Idec fell $26.38, or 39%, to $40.90, while Elan's swooned $17.59, or 65.4%, to $9.31.

"The companies are suspending supply of Tysabri from commercial distribution and physicians should suspend dosing of Tysabri until further notification," Biogen Idec and Elan said. "In addition, the companies have suspended dosing in all clinical trials."

Tysabri was cleared for marketing by the FDA in November. The companies sought and received early FDA approval after what was considered extremely successful early phase III clinical testing. (The companies agreed to continue phase III testing.)

To date, the companies said there are no reports of PML in multiple-sclerosis patients receiving Tysabri alone or in patients with Crohn's disease or rheumatoid arthritis in clinical trials. Biogen has received no reports of PML in patients treated with Avonex alone, a product that has been on the market since 1996.

Avonex is another Biogen Idec drug. Before Monday, the big question was to what degree the jointly marketed Tysabri would damage sales of Avonex or whether physicians would prescribe the two drugs as a joint treatment.

The setback could run deep. Tysabri is being tested for other uses. For example, Biogen Idec had expected phase II clinical trial results in mid-2005 for Tysabri as a treatment for rheumatoid arthritis. Phase II is the second of three rounds of clinical tests before a drug is submitted to regulators.

Tyasbri also is being tested as a treatment for the chronic, debilitating gastrointestinal ailment called Crohn's Disease. In September, the companies filed an application with the European Union for this indication. Test results from another phase III test are due in mid-2005; then the companies will decide about seeking U.S. approval.

The move boosted shares of rival drugmakers with alternative treatments:

Chiron

(CHIR) - Get Report

rose 4% and

Teva Pharmaceuticals

(TEVA) - Get Report

jumped 10%.