Oct. 23 (Bloomberg) -- Biogen Idec Inc. and Elan Corp. fell after cases of a potentially fatal brain disease linked to their multiple sclerosis drug Tysabri jumped to 23 from 13 previously disclosed.

Biogen dropped $3.42, or 7.2 percent, to $43.81 at 4 p.m. New York time in Nasdaq Stock Market composite trading, the biggest decline since Dec. 1. Elan plunged 20 percent, the most since Aug. 1, 2008, closing at 3.42 euros in Dublin trading.

European regulators will review “any additional measures necessary to ensure the safe use of Tysabri and how to balance the risks to the patients against the benefits of the treatment,” the European Medicines Agency said today in a statement on its Web site disclosing the new brain infections.

“These new cases are likely to alarm physicians whose comfort with the product had been increasing in recent months, and should catalyze academic and regulatory discussions about more active risk mitigation strategies,” said Geoff Porges, a New York analyst with Sanford C. Bernstein & Co., in a note to clients today.

The U.S. Food and Drug Administration temporarily suspended sales of Tysabri in 2005 after three cases of the brain infections, known as PML, or progressive multifocal leukoencephalopathy, were reported. Patients successfully pleaded for the product’s return and since then, investors and doctors have closely monitored reported side effects.

Label Change

Al Sandrock, Biogen’s vice president of medical research, said Oct. 20 that Tysabri’s label may change to say that the risk of PML rises with the number of infusions with the drug. As of that date, the company had disclosed 13 infections of PML.

“As we said earlier this week, we initiated conversations with regulators around the globe, including the European Medicines Agency, about updating the label,” Biogen spokeswoman Naomi Aoki said today in a telephone interview. “We did that because it became clear to us that there does appear to be a link between the risk and the length of time you’re on Tysabri therapy.”

Aoki declined to comment on the number of patients who had been diagnosed with PML, saying only that the number was “consistent with the 1 in 1,000” on the drug’s label.

FDA Confirms

The FDA confirmed there have been 23 cases of PML in Tysabri patients since marketing of the drug resumed in 2006, Karen Riley, a spokeswoman, wrote in an e-mail today.

“The FDA continues to receive reports of PML cases in real time and we are monitoring the incidence of PML both in the United States and worldwide on an ongoing basis,” Riley wrote. “The agency is continuing to assess the issue to determine the need for further regulatory action.”

The new cases reported in Europe may push the total number of Tysabri patients who have contracted PML above the infection rates currently discussed on the U.S. label for the medicine, said Yaron Werber, an analyst with Citigroup Global Markets Inc. in New York, in a note to clients today.

If the patients were on Tysabri for more than a year and fewer than two years, the rate is below the 1 in 1,000 indicated on the U.S. label, Werber said. If all of the patients were taking the therapy for two years or longer, the infection rate would be “an alarming 1.42 out of 1,000,” Werber said.

“If the rate creeps substantially above 1 out of 1,000, it is possible that regulatory agencies may consider more severe measures,” Werber said.

Niamh Lyon, an Elan spokeswoman, said in an interview that it would be “imprudent” to speculate or comment on regulatory discussions or their potential outcomes.

To contact the reporters on this story: Elizabeth Lopatto in New York at elopatto@bloomberg.net; Trista Kelley in London at tkelley2@bloomberg.net

Last Updated: October 23, 2009 16:15 EDT