NEW YORK – Biogen Idec (BIIB) and Elan Corp. Plc (ELN) on Monday suspended sales of their much-heralded new multiple sclerosis drug after a patient died from a rare and often fatal central nervous system disease, sending shares of both drugmakers plummeting.
The companies based their decision on one confirmed, fatal case of the condition, known as progressive multifocal leukoencephalopathy (search) (PML), and one suspected case of the condition. The company has also suspended dosing in all clinical trials of the drug.
About 2,600 people are in clinical trials for the product, known as Tysabri (search), and a further 3,000 are taking the drug on a commercial basis.
The drug, which was approved last November, was widely expected to become the world's leading multiple sclerosis treatment and the driving force behind a revitalization of Elan and a new growth spurt for Biogen Idec, whose existing multiple sclerosis drug, Avonex, faces increased competition.
"If the drug comes back it will have a huge safety cloud over it and will require a set of investigations of all patients pre-and post marketing approval," said Geoff Porges, an analyst with Bernstein & Co. "That is likely to take months, not days or weeks."
The sales suspension follows Merck's (MRK) withdrawal of its blockbuster pain drug Vioxx after a study showed it doubled heart attack and stroke risk compared with placebo in patients taking the drug for more than 18 months.
Elan's shares fell 57 percent, wiping about 3 percent off the value of the Irish stock market. Biogen Idec shares tumbled 40 percent to $26.92, dragging the American Stock Exchange biotechnology index down 4.2 percent.
Biogen was the top performing stock over a 10-year period, according to a report in Monday's Wall Street Journal.
The patients cited by the companies were taking both Tysabri and Avonex. To date, the companies said they have no reports of PML in patients receiving Tysabri or Avonex alone.
Biogen Idec had hoped patients would get an extra benefit by taking both drugs.
"Without Tysabri, I think Biogen is handicapped as far as the long-term growth they had been expecting," said Sena Lund of Cathay Financial
Elan said it is likely to make adjustments to its 2005 forecasts within the next 10 days.
"It is an exceptional step where a company suspends the commercial distribution of a drug based on one case," said Dr. Lars Ekman, executive vice president and president of research and development at Elan.
The sales suspension caused Deutsche Bank Equity Research analyst Jennifer Chao to cut her rating on Biogen Idec to "sell" from "buy" based on the loss of sales and lack of clarity in the mid-term.
But Elan investors felt the bigger blow.
"The largest blow is, of course, for Elan, as they came back sharply on Tysabri after all the setbacks in recent years," said Bob Pooler, an analyst at Swiss brokerage Lombard Odier Darier Hentsch.
Multiple sclerosis, an autoimmune disorder that targets the central nervous system, is a devastating disease that can cause blurred vision, weakness, poor muscle coordination and loss of memory and other mental functions. It affects about 400,000 Americans, according to the National Institutes of Health.
Elan shares fell $9 to $17.90 on the New York Stock Exchange and 13.8 euros to 6.5 euros on the Irish stock market. Biogen Idec's shares fell 41 percent to $39.32 on the New York Stock Exchange.
Shares of the Swiss biotechnology company Serono SA, whose Rebif drug had been threatened by Tysabri, rose 17 percent to 837 Swiss francs, while Germany's Schering AG, which makes another rival product, rose 5.1 percent to 56.40 euros.
Shares of Teva Pharmaceutical Industries Ltd. (TEVA), which markets the multiple sclerosis drug Copaxone, rose more than 8 percent to $29.90 on the Nasdaq.