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[See article correction.] The roller-coaster ride that the drug Tysabri has been on over the past several years hit another high this week as the FDA approved it to treat Crohn's Disease [CD]. But this approval doesn't necessarily mean the roller-coaster ride will end for the drug, which is co-marketed by Elan (NYSE:ELN) and Biogen Idec (NASDAQ:BIIB) and also is approved to treat multiple sclerosis [MS].

Tysabri was originally approved for MS in 2004, but was pulled from the market in 2005 after two patients died after contracting PML. The FDA allowed the drug to return to the market in 2006 with a risk-management plan, and there have been no complications with PML since. The drug will have a risk-management plan for Crohn's as well.

There are approximately 500,000 people in the U.S. with CD according to the companies, which represents a market of approximately $800 million per year. However, analysts don't expect the drug to push for significant market share in CD. Tysabri is essentially a third-line therapy for Crohn's, behind Schering-Plough's (SGP) Remicade and Abbott's (NYSE:ABT) Humira. Concerns about safety and the fact that the EU rejected its approval for CD in November will limit the drug's sales in my view.

One analyst says that Tysabri could reach $182 million in peak sales for CD alone by 2013. Other estimates have the drug reaching $40 million by 2010. Total sales estimates for Tysabri, including both MS and CD, range from $400 million to $670 million by 2010.

The addition of Crohn's to Tysabri's approval list shouldn't do much for either stock, in my view. Biogen's stock didn't react much to the news, trading up only 1% on the the day of the approval. Elan has more to gain from Crohn's since about 37% of its sales came from Tysabri in the third quarter 2007. But, investors didn't push the stock up any with the approval. I'm not overwhelmed either. Tysabri has been shown to be a high-risk drug and it isn't going to grab the market share in Crohn's to help these companies too much. Tysabri is not a good enough reason to invest in either Biogen or Elan. However, both do have other products and good pipelines that might be worth taking a look at if you are interested in these two firms.

Disclosure: I do not have positions in any of the stocks mentioned.

Source: Elan, Biogen Idec Won't Gain Much from Tysabri Approval