Editor

In November, when their would-be blockbuster drug for multiple sclerosis won FDA approval based on a single year of data, Biogen Idec Inc. and Elan Corp. plc disclosed they had changed the name of the compound from Antegren (which had been used during its development) to the odd-looking and harder-to-pronounce Tysabri.

The reason was simple. "Antegren" sounded too much like other drugs already on the market, and might be confused with them. An example is the heart drug Integrilin (eptifibatide) from Millennium Pharmaceuticals Inc., a compound that seems to be doing quite well, by the way, with revenues estimated at $326 million this year by one analyst firm attending the company's "investor day" last week.

It's possible not everyone has been pleased with Tysabri's name change. But you can bet Millennium was - especially when, earlier in the week, Biogen Idec and Elan told the world they had taken the drug off the market after the death of a clinical trial patient treated with Tysabri (natalizumab) and the firm's other MS drug, Avonex (interferon beta-1a) together.

The companies had formed the drug's new name around "abri," which means "shelter" in French, intending to convey a sense of protection afforded by the first-in-class compound. But that attempt came to bear a chilling irony. Investigators determined the cause of the Tysabri trial patient's death to be progressive multifocal leukoencephalopathy (PML). Another patient was diagnosed with a suspected case of the fatal disease, which was confirmed Thursday.

Wall Street's reaction to the withdrawal was swift and severe. Elan lost more than 70 percent of its value Tuesday, and Biogen Idec fell more than 42 percent. Analysts scrambled to downgrade their ratings. Bear Stearns demoted Biogen Idec to "underperform," Deutsche Bank Securities to "sell," CIBC World Markets to "sector perform." JPMorgan Securities knocked the stock to "neutral," as did Credit Suisse First Boston. Other analyst firms to lower their opinions included Lazard Freres, Lehman Brothers and A.G. Edwards and Sons.

Biogen Idec, which had been watching sales of Antegren slide, had put its chips on the alpha-4 antagonist Tysabri. But analysts whittled their revenue estimates for the drug sharply - and speculated that it might never return to the market.

Even Hibernia Southcoast Capital - one of two firms to upgrade Biogen Idec shares to "buy" following the Tysabri withdrawal (the other was Smith Barney Citigroup) - put the potential at $1.3 billion worldwide, "slightly less than half of what it was before," said Hibernia analyst Bennett Weintraub. He put the chance of Tysabri returning at about 40 percent.

"That's a middle-of-the road estimate," he told BioWorld Financial Watch.

What may have unsettled investors most is that Avonex could be "somehow potentially implicated in all of this," said Winton Gibbons, analyst with William Blair & Co., which is why Biogen Idec (after talks with the FDA) "rightly chose to take a more cautious approach" to the PML problem.

Biogen Idec issued an update Thursday that officially confirmed the second PML case, and pointed out that no reports of PML had surfaced in patients given Tysabri as a monotherapy for MS, or those in whom the drug was tested against Crohn's disease and rheumatoid arthritis. Nor has PML been noted in patients treated with Avonex alone, and the product has been available since 1996. The second PML case confirmation drove Elan down another 14.1 percent Friday, and dropped Biogen Idec another 4.6 percent.

PML is a serious disease. Typically striking patients with compromised immune systems, such as those with AIDS and transplant recipients, the condition begins its damage after the activation of latent JC virus, a human polyomavirus present in many healthy people's kidneys and named after the initials of PML's first identified victim. Symptoms of PML include mental deterioration, cortical blindness, speech disturbance, ataxia and paralysis. There is no treatment or cure, and most patients die within four months.

Why would Tysabri cause PML? Possibly, the drug's blocking of T cells' entry into the brain (where, in MS, they attack the myelin sheath covering nerves) clears the way for PML to grow. But Biogen Idec and Elan hoped to know more after a meeting with experts that took place Friday. All available MRI scans of Tysabri recipients will be re-examined for any evidence of PML.

Weintraub said Avonex is an "unlikely" culprit in PML. Some investors seem to have disagreed. Serono SA's stock rose 17 percent Monday, the day the Tysabri withdrawal was made public. Serono markets the beta interferon Rebif for MS, one of Avonex's competitors.

"People think Rebif will do better now that Tysabri's out of there," Weintraub acknowledged. "But if it's Avonex [causing the PML], then it will be all the interferons that have this risk," including Rebif.

Christopher Raymond, analyst with Robert W. Baird & Co., projected a relaunch of Tysabri next year, with worldwide end-user revenues of $165 million and $282 million, for fiscal years 2006 and 2007, respectively. That's down from $863 million and $1.6 billion, respectively.

Others are less sanguine.

In any case, a broader issue is whether the withdrawal signals - or will cause - a more cautious mood at the FDA and a subsequent slowdown in approvals. Gibbons doesn't think so. The agency already was "skittish" about Tysabri, since the drug was approved with one-year data (rather than two-year data, as might be expected with MS).

"Rare events [such as PML] when a drug's been on the market for a long time are very different from rare events when a drug is new to the market," he said, adding that scrutiny for a new drug would be expected in any climate.

Eric Schmidt, analyst with SG Cowen & Co., wasn't so certain. He noted that Tysabri was taken off the market after talks with the agency, and "even that decision-making process may have reflected the fact that the FDA has been more conservative than usual," he said.

The uproar over Tysabri, the first biotechnology drug to be pulled from the market, reminded some observers of Vioxx (rofecoxib), withdrawn six months ago because of cardiovascular concerns, though two FDA advisory committees last month voted to allow Merck & Co. Inc. to start selling the painkiller again.

That Vioxx comparison was reflexive, Weintraub said, and predicted that Biogen Idec's stock in the short term will continue to perform well. "The medium term will depend on how those MRI scans come back," he said.