Biogen and Elan report Tysabri brain disease cases

By Deena Beasley and Bill Berkrot

LOS ANGELES/NEW YORK (Reuters) - Biogen Idec (BIIB.O) and Elan (ELN.I) have notified regulators of two new cases of a potentially deadly brain disease in multiple sclerosis (MS) patients being treated with Tysabri.

Biogen shares dropped about 23 percent in after-hours trading, while Elan's shares fell 45 percent in New York.

"This is going to have very broad, very wide ramifications for the commercial prospects of the drug because there's just a lot of uncertainty here," said Cowen & Co analyst Eric Schmidt.

Tysabri, co-marketed by Ireland's Elan and Cambridge, Massachusetts-based Biogen, was withdrawn from the market in 2005 after three patients developed the brain infection known as progressive multifocal leukoencephalopathy (PML).

The drug returned to the market in 2006 with warnings after the U.S. Food and Drug Administration decided MS patients willing to accept the risks should be able to have access to the drug's potential benefits.

The two new PML patients, one of whom is hospitalized, are in the European Union, the companies said.

More cases are likely and physicians are likely to reduce the number of patients they start on the drug as they are reminded of long-term potential safety issues, Morgan Stanley analyst Steven Harr said in a research note.

Elan and Biogen said more than 31,800 patients were being treated with Tysabri as of the end of June and second-quarter sales totalled $200 million (100 million pounds).