Updated from 5:58 p.m. EDTBiogen Idec ( BIIB - Get Report) confirmed late Wednesday that a third patient taking its multiple sclerosis drug Tysabri developed the dangerous brain infection progressive multifocal leukoencephalopathy. New cases of PML in Tysabri patients were widely expected and remain in line with the label. However, shares of Biogen and partner Elan ( ELN) continued to decline Thursday, losing 6.3% and 12.4%, respectively. Investors reacted similarly to earlier cases. Biogen reported in an 8-K filing with the Securities and Exchange Commission that regulatory agencies were notified Wednesday of the new confirmed case of the condition in a patient with multiple sclerosis. The drug was removed from the market in 2005 after being linked to PML, which can be deadly, but it has since been relaunched with information about the PML risk on its label. The new patient was a female in the U.S., according to Biogen spokeswoman Naomi Aoki. The patient is under the care of her treating physician, and she was confirmed to have the infection after 14 injections of Tysabri. In late July, Biogen and Elan disclosed the first two confirmed cases of PML since the drug's relaunch, sending both stocks into a tailspin. Both of those patients have shown signs of improvement, said Aoki, noting that heightened clinical vigilance and risk-management programs have been key to early detection. One of the patients remains hospitalized. The Food and Drug Administration has since expanded Tysabri's warning label to include the risk of the infection with the drug when it is used alone. "PML remains a rare adverse event in Tysabri patients, and the rate seen is consistent with what you'd expect to see based on the cases discussed in the label," Aoki said. The label currently indicates that the expected rate is one occurrence in 1,000 patients, which was calculated at the time of the drug's reintroduction to the market. "We do not believe this changes the risk profile of the drug, where three cases of 18,000 commercial patients on therapy for over one year (1 in 6,000) still looks much better than the label at one in 1,000," wrote JPMorgan analyst Geoff Meacham in. "Hence, we see a very low probability Tysabri will be pulled from the market, and we doubt this will have a material impact on new patient adds beyond the adds seen in 3Q. "We continue to believe that clinical vigilance allowing for early identification and treatment for PML could improve the risk profile for Tysabri, as PML could become a manageable side effect," wrote Meacham, who reiterated an overweight rating for Biogen.
Wall Street had been watching Biogen's third quarter numbers last week to see how the two new cases might be affecting sales of the drug. Sales came in ahead of expectations, but shares declined as investors weighed comments by management regarding Biogen's goal for patients on the MS drug. The company said growth would now have to accelerate in order to reach 100,000 patients on Tysabri by 2010, although it was sticking to the target. Biogen said last week that as of the end of September, there were more than 35,500 patients on commercial and clinical Tysabri therapy worldwide, compared with 31,800 patients at the end of the second quarter. "It's an important therapeutic option that's offered hope to many patients living in U.S.," said Aoki. "We think the risk-benefit profile remains favorable." Tysabri isn't alone when it comes to instances of PML. There have been a number of other immunosuppressant drugs linked to PML, noted Summer Street's Carol Werther earlier this year, including Rituxan, a drug from Genentech ( DNA) and Biogen Idec. There have also been postmarketing reports of PML in patients who took Roche's CellCept and Novartis' ( NVS - Get Report) Myfortic, drugs used to keep the body from rejecting transplanted organs. Deutsche Bank analyst Mark Schoenebaum commented Wednesday that new cases in patients taking Tysabri were expected, and he believes Biogen's stock will recover. "Based on our conservative estimates, we think Biogen is worth mid $40s with Tysabri completely excluded, so downside should be largely protected," wrote JPMorgan's Meacham late Wednesday. "However, if BIIB shares do not sell off dramatically
on Thursday, we would view this as a bullish sign that PML is fully priced in."