Note: This article, published Wednesday, has been changed to reflect the fact that the deaths of two, not three, patients were linked to the drug Tysabri. The Motley Fool deeply regrets the error.

Shares of Elan (NYSE:ELN) and Motley Fool Stock Advisor recommendation Biogen Idec (NASDAQ:BIIB) jumped 14% and 7%, respectively, on yesterday's news that a recent Elan study found no new confirmed cases of the brain disease, PML, in patients who had taken Tysabri -- a promising multiple sclerosis-fighting drug that was pulled this spring after the deaths of two patients were linked to it.

Tuesday's news obviously bolstered investor confidence that Tysabri will make its way back onto the market, but does that make Elan a good investment opportunity?

The answer is "no" in the short term and "yes" in the long term.

The incongruity stems from investors' overemphasis on Tysabri, together with a lack of appreciation for the longer-term growth prospects of the company's NanoCrystal technology.

Regarding the first, yesterday's news about Tysabri wasn't really news. In the immediate wake of the company pulling the drug, many industry analysts predicted Tysabri would eventually make a limited comeback because it was so successful at treating MS. Even the FDA said at the time of the withdrawal that it "continues to believe Tysabri offers great hope to MS patients."

However, these predictions were not enough to keep Elan's stock from plunging almost 90%. At the time, the steep decrease seemed to be an overreaction by the market, which acted as though Tysabri was the only drug in Elan's pipeline.

Yesterday's increase seems to reflect a more balanced and appropriate response. This is because if and when Tysabri receives new FDA approval, its use will be limited to those MS suffers who have no alternative treatment. This is a much smaller population and suggests the drug captured nowhere near the number of users that drove up Elan's share price to $30 a share back in February.

Another reason I am bearish in the short run is because yesterday's announcement only said there were "no new confirmed cases." The company was careful to state that it had not resolved the problem, nor did it imply that there would be "no new cases."

The company's careful wording is important and would-be investors in Elan are encouraged to take it to heart, because it suggests Tysabri is not yet out of the woods. Furthermore, the company will continue to face uncertain liabilities in the form of wrongful death lawsuits from the two patients who died.

But in spite of these things, I am long on Elan. In fact, I own shares of the company. It has little to do with Tysabri, though. What I really like about the company is its NanoCrystal Technology, which takes advantage of the unique properties of nanoparticles to help improve the bioavailability of any number of drugs.

This is an important characteristic because the vast majority of drug candidates produced by Eli Lilly (NYSE:LLY), Motley FoolIncome Investor selection Merck (NYSE:MRK), GlaxoSmithKline (NYSE:GSK), and other pharmaceutical companies either fail or are abandoned as a result of poor water solubility. In fact, even those that are considered successful often still suffer from poor solubility. If you have ever cringed at some of the disclaimers drug companies tack on to the end of their advertisements -- e.g., "This drug may induce vomiting, hair loss, severe diarrhea, etc." -- you may be comforted to know that often these adverse effects are not the result of the drug itself but rather the toxic compounds added to the drug to make it more soluble.

Elan's nanoparticles may do more than alleviate may of these unpleasant side effects; the technology is also expected to help drugs be absorbed faster and distributed more evenly to their intended target areas.

Elan's NanoCrystal technology is already being used by Johnson & Johnson (NYSE:JNJ) in a phase 3 clinical trial for a schizophrenia drug, and Roche began testing the technology earlier this year. Just last week, MAP Pharmaceuticals announced its intention to apply NanoCrystal to one of its inhalation therapies for asthma.

There is no shortage of potential licensing opportunities if the technology is successful. Not only does NanoCrystal technology offer the promise of making new and more effective drugs, it also suggests that a number of existing drugs can be improved.

The entire pharmaceutical industry has two big problems. The first is that it is straining under the development cost of new drugs. The second is that the patents on nearly 60% of its blockbuster drugs are set to expire in the next few years. Elan's NanoCrystal can help address both issues and it is why, as I gaze into my NanoCrystal ball, I believe Elan continues to represent a solid long-term investment opportunity.

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Fool contributor Jack Uldrich has been accused by teachers and friends alike of thinking small since grade school. He is the author of The Next Big Thing is Really Small: How Nanotechnology Will Change the Future of Your Business. He owns shares of Elan. The Fool has an ironclad disclosure policy.