Elan and Biogen Denied

On a day when one immunomodulating drug was given approval to treat a new disease, Elan (NYSE: ELN  ) and Biogen Idec's (Nasdaq: BIIB  ) multiple sclerosis treatment, Tysabri, was denied a label expansion.

On Friday, Elan and Biogen got word from the European Medicines Agency (EMEA) that it had rejected their appeal of the agency's earlier July decision to deny Tysabri's use as a treatment for Crohn's disease.

Tysabri wasn't the only potential Crohn's disease treatment to hit a snag this year. PDL BioPharma (Nasdaq: PDLI  ) halted development of its drug candidate Nuvion, which it was also considering testing in Crohn's, after it showed a lack of efficacy in a phase 2 study for ulcerative colitis patients.

Ironically, on the same day that it was rejecting Tysabri for a lack of efficacy and safety concerns in Crohn's patients, the EMEA approved Abbott Laboratories' (NYSE: ABT  ) Crohn's disease treatment, Humira, for use in an additional disease. If it had been approved, Tysabri would have been the only biologic besides Humira and Johnson & Johnson's (NYSE: JNJ  ) Remicade available to treat Crohn's disease.

In the U.S., Elan and Biogen's attempt at getting Tysabri approved for Crohn's disease got off to a better start than in the European Union; an FDA advisory panel in August voted 12-3 to recommend approving the drug.

The drugmakers hit a little stumbling block last month when the FDA extended its review of their Crohn's disease marketing application by three months, but an approval decision by the agency is still expected on or before Jan. 13.

The companies aim to have 100,000 patients treated with the drug by the end of 2010. Thankfully for those who believe this is possible, Elan and Biogen did not estimate much use of the drug in Crohn's disease would be needed to hit those numbers. On its third-quarter conference call, Biogen's CEO said the companies estimated only "modest" use of Tysabri for Crohn's disease.

If you believe Tysabri will eventually become a $3-billion-a-year drug, as Biogen and Elan do (assuming its sales price rises to $30,000 a year), then you don't have to reduce your Tysabri sales forecast much (or at all) because of  this E.U. label expansion denial.

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