Elan (NYSE:ELN) is in need of a serious makeover. The company has been beaten down severely, but there's still plenty of beauty in this previously $37-per-share stock.

Elan isn't just its multiple sclerosis drug Tysabri (Elan's portion of sales of Tysabri, which it shares with partner Biogen Idec (NASDAQ:BIIB), was 56% of revenue last year). But given the 140% growth in sales of the drug last year, Elan's near-term future direction depends on sales of Tysabri.

The problem is that perception of Tysabri has changed since the cases of progressive multifocal leukoencephalopathy (PML) were reported last year. That's affecting sales. For the fourth quarter, sales of Tysabri grew by only 50% in the U.S. Compare that to Q2, just before those reports came out, where U.S. sales grew by 111%. If Biogen and Elan are going to get Tysabri growing at high rates again, they're going to have to convince multiple sclerosis patients that the risk-reward ratio is still better for Tysabri than it is for other treatments like Copaxone, from Teva Pharmaceutical (NASDAQ:TEVA), or Rebif, from EMD Serono and Pfizer (NYSE:PFE).

Fortunately, it's not just the number of cases of PML that patients and doctors are looking at; they also factor in what happens to the patients who get PML. In AIDS patients, PML is often fatal, since the patients have compromised immune systems. But if Biogen and Elan can get PML recognized early and the patients off Tysabri quickly enough, the immune system can kick back in and might be able to fight off the infection. In this case, Tysabri that causes manageable PML looks a lot better than Tysabri that has death as a potential side effect.

Elan itself is also in need of a makeover. It's undergoing a "strategic review," which could result in anything from licensing drugs to selling part or all of the company. It has to do something; this year, it's expecting to burn through more than half of the almost $450 million it has on the books (Elan has a large amount of debt due in 2011 and some more due in 2013). The uncertainty of what will come from the review is also weighing on the stock; it'll look much prettier without that on its back.

The longer term value of Elan is tied up in its Alzheimer's disease partnership with Wyeth (NYSE:WYE) -- something that Rule Breakers analyst Charly Travers estimated investors were getting for free when he recommended the stock to subscribers a few months ago. But in the short term it's going to have to shift perceptions of patients, doctors, and investors before it can get back to its glory days.

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Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. Biogen is a Stock Advisor recommendation. The Fool owns shares of Pfizer, which is a recommendation of the Income Investor and Inside Value newsletters. The beauty of the Fool's disclosure policy is only paper-deep.