Fear is contagious. You can see it playing out these days in the drug industry. When Merck (NYSE:MRK) disclosed last fall that it was withdrawing its painkiller Vioxx from the market because of a connection with cardiac events, worries later surfaced over Pfizer's (NYSE:PFE) own COX-2 inhibitors, Celebrex and Bextra. When some data suggested that Celebrex was indeed linked to some cardiovascular issues, the cycle of fear was in full swing, perhaps nowhere more so than at the Food and Drug Administration, whose reputation as a guardian of public safety was at stake.
Just months after that debacle, another epidemic of fear is spreading in the drug sector. The industry was stunned when BiogenIDEC (NASDAQ:BIIB) and Elan (NYSE:ELN) announced that they were pulling their multiple sclerosis (MS) treatment Tysabri from the market based on evidence that Tysabri, in combination with the BiogenIDEC MS drug Avonex, may cause a rare disease of the central nervous system. Perhaps more significantly, the FDA's standing took another blow.
Now it looks as if the agency is taking no chances. GlaxoSmithKline (NYSE:GSK) reported yesterday that the FDA halted phase 2 trials of its multiple sclerosis and Crohn's disease drug known as candidate 683-699. In one sense, the move is understandable. Glaxo's experimental medicine targets VLA-4, the same immune-system protein that Tysabri zeroes in on to treat MS. But that's basically where the similarity ends. Glaxo's drug is a traditional chemical compound designed to be taken orally. Tysabri, meanwhile, is a monoclonal antibody, a biological substance that is injected intravenously.
Unfortunately for drug industry investors, until BiogenIDEC, Elan, and the FDA determine the nature of Tysabri's problem, Glaxo's research efforts are likely to be frozen. And Glaxo probably won't be the only company affected --Schering-Plough (NYSE:SGP), for example, has a medicine in preclinical studies that also targets VLA-4, according to Pharmaprojects. Until the fear subsides, investors are likely to suffer.
For more on the pharmaceutical industry's woes, see:
Fool contributor Brian Gorman is a freelance writer in Chicago. He does not own shares of any companies mentioned in this article.
