Two serious adverse events - one ending in death - was enough for Biogen Idec Inc. and Elan Corp. plc to suspend marketing of their multiple sclerosis drug, Tysabri, just three months after FDA approval.

The drug was once pegged a potential blockbuster, expected to bring the companies billions of dollars within a few years. It was approved at the end of November based on only one-year data because of high efficacy results.

The news shook Wall Street, as analysts worked non-stop Monday to change their models and ratings. Meanwhile, investors dumped shares. More than 600 members of the media and investment community joined a conference call led by Cambridge, Mass.-based Biogen Idec, while the company's stock bled on Nasdaq.

Biogen Idec (NASDAQ:BIIB) plummeted 42.6 percent, or $28.63, to close at $38.65, while Elan's stock (NYSE:ELN) fell 70.3 percent, or $18.90, to close at $8.

"I think the first question we need to ask is, Will this drug ever be back on the market?' We don't know that yet," said analyst Christopher Raymond, of Chicago-based Robert W. Baird & Co. "Assuming it is, if it makes its way back on the market, the next question is, To what degree will it be utilized?'"

Certainly there are a lot of questions surrounding Tysabri, but this is what the companies know. Two clinical trial patients treated with Tysabri in combination with Avonex (interferon beta-1a) at different sites have suffered serious adverse events. One patient died a few days ago of a confirmed case of progressive multifocal leukoencephalopathy (PML). A second patient has a suspected case of PML, which typically affects immunocompromised patients, such as those receiving transplants, undergoing extensive chemotherapy, or those with AIDS.

None of the patients in the clinical trials had a known history of immunosuppression.

PML is caused by the JC virus and is characterized by destruction of the myelin sheath, a fatty covering on nerve fibers in the brain. Symptoms include mental deterioration, vision loss, speech disturbances, ataxia, paralysis and coma. There is no cure, and death usually occurs between one and four months after onset.

Both patients with the adverse event had MS, were in good health, were receiving Avonex and Tysabri, and had been treated for more than two years.

The FDA approved Tysabri based on data that showed Tysabri reduced relapse rates by 66 percent when used alone, and by 54 percent when used with Avonex. Biogen Idec received approval for Avonex in 1996. (See BioWorld Today, Nov. 29, 2004.)

As soon as Biogen Idec and Elan became aware of the adverse events, they consulted with the FDA and made the decision to voluntarily suspend supply of Tysabri from commercial distribution, as well as to suspend dosing in all clinical trials, including those testing Tysabri in Crohn's disease and rheumatoid arthritis. They also have advised physicians to suspend dosing for any patients prescribed the therapy - about 5,000 people in total, a third of which are estimated to be on the combination therapy regimen.

"We have a lot more that we're going to learn over the next few weeks about the risk," said Jim Mullen, Biogen Idec's CEO. "Everybody should remember that we've been looking at a product here with a very strong efficacy profile. The risk profile was pretty well understood up until these two events. We're trying to take a step back. We need to reassess this risk-to-benefit profile for this product and go from there."

The companies will investigate further the two adverse event cases and work with clinical investigators to conduct a physical exam and brain MRI of clinical trial patients. They also will consult with experts to better understand the possible risk of PML.

"I don't think it will take us that long to evaluate the situation, but it may take some time to figure out what the path forward is, because we will have to work closely with the regulators," Mullen said.

But Raymond warned that even if Tysabri is re-launched, physicians will be leery about putting their patients on the drug.

"I think having a black box warning is probably a minimum, and also saying do not use in combination,'" he said. "But most folks had modeled that this would be used in combination with beta interferons and used in a lot of patients who were fairly well managed with beta interferons."

Analyst Eric Schmidt and his colleagues at New York-based SG Cowen & Co. agreed. They removed Tysabri from their estimates, saying reintroduction of the drug will be challenging, as "physicians and patients are likely to be very cautious in returning to the therapy."

Now, Tysabri might be limited only to patients who do not do well on beta interferons, knocking the product's potential down to a small fraction of the multibillion-dollar range. In the short term, it doesn't affect Biogen Idec's revenues greatly. The company posted only $3.1 million for Tysabri sales in 2004, a small portion of the $2.2 billion in total sales for the company. But analysts had high hopes.

Raymond had estimated end-user revenue for Tysabri to be $286 million in 2005, $860 million in 2006 and $1.6 billion in 2007.

"Before this blew up, we were on the low side of expectations," he said.

MS patients and investors might not be the only ones that suffer the brunt of the Tysabri withdrawal. Biogen Idec had hired about 450 people to ramp up the product.

"In terms of the sales force, their first job right now is to assist patients and physicians," Mullen said. "Obviously, this is a shock wave for those folks. They've been gearing up; there's been a strong demand for Tysabri."

About 3,000 patients have received Tysabri treatment in clinical trials of MS, Crohn's disease and rheumatoid arthritis. About 500 patients have received combination therapy for more than two years. There have been no reports of PML in MS patients receiving Tysabri alone or Avonex alone, or in patients receiving Tysabri for Crohn's disease or rheumatoid arthritis.

The crater left by the Tysabri blowup is large. Fremont, Calif.-based Protein Design Labs Inc. granted Elan in May 1998 a worldwide, nonexclusive license under its antibody humanization patents related to Tysabri (then called Antegren), which was in Phase II testing for MS at the time. Through that stream, PDL set itself up to receive Tysabri royalties, but that's all in doubt now, and the company's shares (NASDAQ:PDLI) fell 13.6 percent Monday, or $2.35, to close at $14.98.

But Raymond said the after-effects might reach even further, and an already-beleaguered FDA might be drawing more fire.

"The FDA already had a bit of an issue with the Vioxx withdrawal and a lot of heat," he said. "This is a little bit different because this is the first time they approved an MS drug based on one-year data.

"I do think that there are going to be a number of questions raised," Raymond added, "so it's not too much of a stretch to imagine that the agency should become more conservative when they're looking at drugs and looking at products that have anything less than robust safety profiles."