Biogen Idec Inc. (BIIB) recently announced that 4 more cases of progressive multifocal leukeoencephalopathy (PML), a potentially deadly brain infection, were observed in November in patients taking its multiple sclerosis drug Tysabri.
 
This brings the total number of PML cases to 28. The company will be providing information on additional cases of PML observed in the month of December shortly. Tysabri is the second multiple sclerosis product in Biogen’s portfolio and is a major growth driver for the company. Biogen was withdrawn from US markets in 2005 due to the PML concern but was reintroduced after one year with a strict warning regarding the occurrence of PML.
 
When re-approved in June 2006, Biogen and partner Elan (ELN), the US Food and Drug Administration (FDA) and the European Medicines Agency (EMEA) agreed that the risk threshold for keeping the drug on the market would be 1/1000. As such, the current incidence rate still falls within the acceptable range.
 
About 46,200 patients were on commercial and clinical Tysabri therapy worldwide at the end of the third quarter of 2009. This represents an increase from the 43,300 patients reported by the company in the second quarter of 2009.
 
We remain concerned that an increase in the number of PML cases associated with the use of Tysabri could lead to a slowdown in Tysabri sales going forward. Until July 2009, 11 cases of PML infection were reported by the company. Since then, reports of additional cases of PML have been filtering in, bringing the total to 28.
 
We continue to expect additional cases of PML to be reported over the next several quarters. Additional instances of PML cases could hamper Tysabri’s acceptance in the medical community thereby limiting its sales growth. In fact, we note that there was a sequential decline in the number of new patients adopting Tysabri in the third quarter of 2009.
 
We currently have a Neutral recommendation on Biogen. Although Biogen’s core business should remain stable in the coming quarters, we believe investor focus will remain on the occurrence of additional PML cases associated with the use of Tysabri. This could remain an overhang on Biogen’s shares in the coming quarters.
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