Correction and Clarification to Tysabri Post

It has been brought to my attention that I made an error in my recent Tysabri article. The drug Remicade is owned by Johnson & Johnson (JNJ), which it received in its purchase of Centocor, Inc. Schering-Plough (SGP) markets the drug outside the United States. I apologize for the error.

Also, I want to clarify a few issues that have been brought up as well.

1) Tysabri was pulled due to links with PML, not necessarily because the drug causes PML. Since it has returned to market, there have been no other links to PML, which was stated in the article.

2) My analysis for the drug is based on its potential in the Crohn's market according to analysts' views. I do not feel that the Crohn's market is the reason to buy these stocks. I did not do analysis for the MS market, since the Crohn's approval was the news. The MS market is very lucrative, and based on both company's views of Tysabri's potential growth, it could be a reason to buy either stocks.

3) Please refer to my disclosure statement at the bottom of my blog.

The article will re-run below with changes made:

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 (ELN) and Biogen Idec (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 there was a link to 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.

According to the companies, there are approximately 500,000 people [with CD] in the U.S., 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 Johnson & Johnson's (JNJ) Remicade and Abbott's (ABT) Humira. In my view, the drug's sales will be limited in CD because of these other treatments and because the EU rejected its approval for CD in November.

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 $1.2 billion 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. Tysabri is not going to grab the market share in Crohn's to help these companies too much. The Crohn's market 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

Comments

[Tibcomonkey]

Brett,

Thanks for correcting the Remicade error. I'm curious about something else though. Other responders to your article made it clear that there are has never been a case of PML with Tysabri in a monotherapy setting. This is the only way that Tysabri can be administered. Therefore there are no links as such to PML in the way that Tysabri is currently being administered. The links are to Tysabti/Avonex and to Tysabry/Azathioprine combination usage and we do not know, in these cases even if Tysabri was a causative agent. Why is so difficult for writers, such as yourself to simply write that there has, to date, in over 20,000 patients, never been a case of PML in Tysabri monotherapy. Surely the MS patients currently taking the medication deserve to know this simple fact instead of being scared by partially false and misleading information?