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Thread: Tysabri withdrawal bottoms out Biogen and Elan stock

  1. #1

    Tysabri withdrawal bottoms out Biogen and Elan stock

    Biogen Idec, Elan Suspend Sales of MS Drug Tysabri (Update7)

    Feb. 28 (Bloomberg) -- Biogen Idec Inc., the third-largest U.S. biotechnology company, and Irish partner Elan Corp. suspended sales of multiple-sclerosis drug Tysabri after one patient died. Shares of both companies slid, wiping out about $17.8 billion in combined market value.

    Tysabri, the first new type of drug in eight years to treat MS, won U.S. Food and Drug Administration approval in November based on partial results of a two-year study. Approval came as the FDA faced scrutiny over drug safety following Merck & Co.'s withdrawal of the painkiller Vioxx in September. Analysts had said sales of Tysabri might eventually exceed $3 billion.
    The article goes on to describe the death of one patient from the drug, a rare CNS disorder called multifocal leukoencephalopathy. The patient was taking both Avonex and Tysabri together. The condition has not been seen in patients taking either of the drugs alone. The shares of Biogen pluged $28.63 OR 43% TO $38.65 while elan dropped $18.90 or 70% to $8.

    Tysabri, given as a once-a-month intravneous infusion, costs $23,000 a year. It is designed to prevent immune-system cells from leaving the bloodstream and entering brain tissues where they can contribute to MS. The companies withdrew the drug before they had their meeting the the FDA which will occur next week.

    This is beginning to be a regular pattern. One death and two companies lose $17.8 billion in stock values. Is it any wonder that companies are now gunshy? This could not have been predicted from any of the data. They had treated thousands of patients with Tysabri. Will the drug be brought back on the market after an FDA review? If so, buying Elan or Biogen stock could lead to a big profit for speculators.

    [This message was edited by Wise Young on 02-28-05 at 07:37 PM.]

  2. #2

    According to Business week, because Biogen is part of the American Stock Exchange, its Biotechnology Stock Index fell 5.5% but, at the same time, Serono (a competitor of Biogen) shares jumped $3.05 or up 20% to close at $18.59. Also, Teva Pharmaceuticals which makes Copaxone rose $9.2% to close at $30.11 and Chiron Corp which makes Betaseron rose 57 cents to $35.58 and Shering AG which developed Betaseron rose $2 or 2.8% to $73.10. All the major investment banks downgraded Biogen stock. Biogen shares closed at $38.65 on Nasdaq and Elan closed at $8. Analyst Ben Weintraub says that Wall Street over-reacted to the news and that Biogen stock should still be worth $43 per share if Tysabri profits were taken out of Biogen.

  3. #3
    In my opinion, the stock market overreacted and there will be a significant correction in the coming days or weeks. I base this opinion on three observations.

    1. Natalizumab or Tysabri showed a dramatic 42% effect on slowing progression of disability in patients with MS when used as a monotherapy in the AFFIRM clinical trial (Source).

    2. Over 5000 patients have taken Tysabri since it was approved. The two adverse reactions occurred in patients who had taken Tysabri combined with Avonex for more than two years. One patient died of progressive multifocal leukoencephalothy (PML) and one other patient has developed the condition. No such adverse reaction has been observed in patients who had taken Tysabri as a monotherapy. The weight of that data is considerably greater than the finding of two patients with PML.

    3. Natalizumab or Tysabri is currently in clinical trials in 60 medical centers around the world, testing the drug to see if it will help Crohn's disease. The prevalence of Crohns disease ranges from 32-64 per 100,000 population, with Scotland having 147/100,000 and Minnesota having 106/100,000 (Source). If we assume that the prevalence is 50/100,000, this would represent about 150,000 people. The incidence of Crohn's disease in on the rise around the world. The drug may also be useful for patients with ulcerative colitis (see below).



    1. Van Assche G and Rutgeerts P (2005). Physiological basis for novel drug therapies used to treat the inflammatory bowel diseases. I. Immunology and therapeutic potential of antiadhesion molecule therapy in inflammatory bowel disease. Am J Physiol Gastrointest Liver Physiol. 288: G169-74. Division of Gastroenterology, Univ. Hospital Leuven, 49 Herestraat, B-3000 Leuven, Belgium. Adhesion molecules regulate the influx of leukocytes in normal and inflamed gut. They are also involved in local lymphocyte stimulation and antigen presentation within the intestinal mucosa. In intestinal inflammation, many adhesion molecules are upregulated, but alpha4-integrins most likely hold a key position in directing leukocytes into the inflamed bowel wall. Therapeutic compounds directed against trafficking of leukocytes have been designed and are being developed as a novel class of drugs in the treatment of Crohn's disease and ulcerative colitis. This review deals with the immunological aspects of leukocyte trafficking focused on gut homing of T cells. Second, the changes in adhesion molecules and T cell trafficking during intestinal inflammation are discussed. Finally, we review the clinical data that have been gathered with respect to the therapeutic potential and the safety of antiadhesion molecule treatment. Antegren, or natalizumab, a humanized anti-alpha4 integrin IgG4 antibody, has been most extensively evaluated and may be close to registration. A more specific humanized alpha4beta7-integrin MLN-02 has shown preliminary clinical efficacy in ulcerative colitis, and both antergren and MLN-02 appear to be very safe. Trials with the anti-ICAM-1 antisense oligonucleotide ISIS-2302 in steroid refractory Crohn's disease have provided conflicting efficacy data. In the near future, some of these novel biological agents may prove valuable therapeutic tools in the management of refractory inflammatory bowel disease, although it is too early to define the patient population that will benefit most from these agents.

  4. #4
    Senior Member Kaprikorn1's Avatar
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    Sep 2002
    S.F. Bay Area, Calif.
    Wise...also, these 2 cases developed by patients who were also taking Avonex at the same time as the Tysabri.

    Elan will bounce back at least a good bit when the hysteria dies down. It is still a strong company with a good income stream.


  5. #5
    Kap, I agree. This deserves a "black box" label that says "On the pain of death, do not take with Avonex until further notice." Wise.

  6. #6
    Senior Member Belle's Avatar
    Join Date
    Jun 2004
    NW Ohio
    Dr. Young, you were right. Biogen Idec Inc. is back up to $41 already today.

    AB wife of T8 complete para

  7. #7
    Part of the reason for the fall of Biogen stock was because it had risen so rapidly in the past two weeks due to the news of the successful trial to a high of $58.88 on 19 February 2005 (Source).

    What is astonishing to me is that three Biogen executives scrambled to sell their stocks in the four days before they notified FDA of the death (Source). Although the company spokeperson said that these stock sales were planned before the company was aware of Tysabri's problems, it is unseemly for company executives to be selling large amounts of stock regardless of the situation.

    Incidentally, Elan executives did the same.

    Insiders cashed in ahead of Elan collapse
    By John O'Mahony, Brian Carroll and Brian O'Mahony

    INSIDERS at Elan's business partners reaped millions in cash bonuses and stock sales shortly before regulators were informed of safety concerns over their multiple sclerosis drug.

    One board member of Biogen Idec, Elan's partner in the use of the MS drug Tysabri, made a profit of €1.47 million after selling 89,700 shares - 10 days before the market collapse of the shares.

    While ordinary shareholders, including thousands of Irish investors, were hit, insiders at Biogen voted themselves massive bonuses before the shares plummeted on the stock exchange.

    The shocking revelations are clear from regulatory filings with the United States Securities and Exchange Commission (SEC).

    On February 14, Biogen director Robert Pangia sold 15,570 shares for a €724,276 profit.

    On February 15, Biogen executive chairman William Rastetter sold 120,313 shares for a profit of €5.65m.

    On February 17, the day before Biogen provided the US Food and Drug Administration information on a patient's death and another serious injury from its Tysabri drug, the company's board of directors approved €3.48m in 2004 executive cash bonuses.

    On February 18, Biogen general counsel Thomas Bucknum sold 89,700 shares for a profit of €1.47m, according to an SEC filing. A Biogen spokesman, Jose Juves, defended Mr Bucknum: "When the trade was made, Mr Bucknum had no knowledge of any safety concerns with Tysabri. The procedure would have been to cancel it had he been aware."

    The spokesman denied that either Rastetter or Pangia had knowledge of Tysabri safety concerns prior to the trades.

    According to SEC filings, no Elan insiders sold shares in the days leading up to the February 18 notification.

    Biogen and Elan on Monday said they were suspending Tysabri sales, sending shares of both companies plummeting.

    They based their decision on one confirmed, fatal case and one suspected case of progressive multifocal leukoencephalopathy (PML), a rare infection of the brain and spinal cord.

    Biogen stock closed down 42.6% at $38.65 on the Nasdaq market on Monday.

    Seven billion dollars was wiped off the market value of Elan on Monday as shares fell 70.3%.

    There were further falls for Elan yesterday, down 16%, closing at €6.33.

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