After the market close, Biogen (BIIB) filed an 8-K with the SEC reporting a new case of the potentially fatal brain disease known as PML or progressive multifocal leukoencephalopathy in a patient receiving their multiple sclerosis [MS] drug Tysabri, adding to the two new cases which were reported previously in July. Biogen is currently trading down by about 15% after hours while marketing partner Elan (ELN) is down by about 25% as of 5:15 PM. The news adds more uncertainty to Tysabri, which was removed from the market in 2005 after the initial cases of PML were reported, but was placed back on the market with stricter warnings in 2006 and approved for expanded use this year in Crohn's disease for patients who do not respond to other treatments. The text from the 8-K filing specifies the following:
- Patient has a history of MS and prior disease modifying therapies, including beta-interferons and glatiramer acetate.
- Patient had also received prior therapy with methotrexate for a rheumatological condition.
- Patient received 14 infusions of Tysabri monotherapy.
- Clinical vigilance led to early identification of signs and symptoms of possible PML and to clinical evaluation which included MRI scanning and CSF testing.
I think the decline in Biogen presents a buying opportunity as the FDA has already expanded the warning label for Tysabri and the occurrence of PML is a rare event (defined on the label as one event per 1,000 patients), with more than 35,000 patients on the drug as of the end of 3Q08. Also, the incidence of PML is not limited to Tysabri as other biological agents and immune modifying drugs have caused the rare brain disorder. Elan is a riskier play than Biogen since the latter is already making money and has a more diverse late-stage pipeline and products on the market, but the decline of 25% after hours in Elan should prove to be an over-reaction and temporary.
$39.8 (10/30/08)
