Here We Go Again With Tysabri

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The number of patients on Biogen Idec's (Nasdaq: BIIB) and Elan's (NYSE: ELN) multiple sclerosis drug, Tysabri, that have gotten progressive multifocal leukoencephalopathy (PML) since the drug was reintroduced to the market has reached double digits.

Late Friday, Biogen said that a tenth case of PML had been discovered. The headlines announced the dire news -- PML is a life-threatening brain infection -- and Biogen's stock fell yesterday, as it's done almost every time before.

Case No.	Date Reported	Stock Price Increase/ (Decrease) After Report
1,2	July 31, 2008	(28.3%)
3	Oct 29, 2008	(3.9%)
4	Dec 15, 2008	(1.7%)
5	Feb 6, 2009	(1.5%)
6	April 17, 2009	(3.5%)
7	May 22, 2009	1.7%
8	June 12, 2009	(2.3%)
9	June 19, 2009	(5%)
10	June 26, 2009	(5.5%)

Source: News reports and Yahoo! Finance.

While the table makes it look like Biogen has been in a steady decline, the stock is actually trading just a little lower than it was after the first two cases were reported some 11 months ago. That's not something that would make Carl Icahn proud, but it's nothing to be alarmed about. Maybe.

Look at that table again and you'll see that the last three reports have come in over the last three weeks and all three patients had been on Tysabri for at least 30 months. It's too early to tell, but if extended exposure to Tysabri increases the likelihood of developing PML, patients may switch to other multiple sclerosis medications like Teva Pharmaceutical's (Nasdaq: TEVA) Copaxone, or Rebif from EMD Serono and Pfizer (NYSE: PFE), or start taking drug holidays. Both events would lower sales.

There's no way for Biogen and Elan to lower the incidence of PML, but they're not helpless in this situation. If they can make PML into a manageable disease -- they're working on ways to both diagnose it early and treat it -- then the side effect should be less of a worry for patients.

Tysabri isn't likely to follow the same fate as Merck's (NYSE: MRK) Vioxx or Wyeth's (NYSE: WYE) Fen-phen and get pulled off the market for good; Tysabri treats a debilitating disease for which there are few good options. But there is still some risk of sales stalling further, and investors should continue to keep a close eye on the situation.