Elan (ELN) dropped 7% after the Irish drug company and Boston-based partner Biogen (BIIB) said their Tysabri drug for multiple sclerosis can harm patients’ livers. The news was first reported by Bloomberg, which cited a note to doctors posted on the Food and Drug Administration’s Web site. The development comes three years after the companies pulled the drug off the market for 16 months so regulators could probe Tysabri’s link to a rare, fatal brain infection. The drug returned to the market in 2006 after the FDA decided the benefits of the drug to MS patients outweighs the risks. The possibility that Tysabri could damage the liver has been reflected in the drug’s label since last month, Bloomberg reported, but the FDA says some doctors may not have known.

The letter adds some to uncertainty overhanging Elan, which is more dependent on Tysabri revenue than its bigger partner Biogen. Rating agency Moody’s recently upgraded Elan, citing Tysabri’s increasing acceptance in the marketplace since its 2006 relaunch. If reports of liver problems slow those gains, though, Elan’s stock - which has doubled over the past year - could be in for a rough patch.

A new wrinkle emerges in the up-and-down story of Biogen Idec (BIIB). The biotech took itself off the auction block Wednesday, two months to the day after the board - under pressure from activist investor Carl Icahn - said it would seek a buyer. The news sent Biogen shares plunging 24 percent in a day, wiping away more than $5 billion in shareholder value.

But the news isn’t all bad - at least not if you’re a Biogen executive. In the days following Biogen’s Oct. 12 announcement that it would seek a buyer, several fortunate execs happened to accelerate their pre-arranged stock selling plans to cash in on the stock’s huge rise, according to a report by Adam Feuerstein at TheStreet.com. Biogen shares reached as high as $84.75 in the days after the sale announcement, compared with $70 or so just beforehand and $59 now. The company says the changes were likely to have been triggered by the stock’s runup, but that doesn’t make Biogen investors who are still holding onto their shares any richer.

Biogen Idec (BIIB) shares plunged after the biotech took itself off the block, saying that even after a two-month-long strategic review conducted by Goldman Sachs and Merrill Lynch it “did not receive any definitive offers to purchase the company.”

The decision, and the resulting 26 percent drop in the stock in Wednesday’s after-hours trading, won’t make any shareholders happy, but activist investor Carl Icahn seems likely to be particularly peeved. Icahn earlier this year took a substantial stake in the maker of the Tysabri treatment for multiple sclerosis and said he’d be willing to pay $80 a share for the whole company. Now the stock is fetching $56. That’s above its level back in the second quarter, when Icahn began building his stake - meaning he’s still likely to be ahead on the investment - but a far cry from the mid-80s where it traded at the height of the buyout rumor frenzy.

The stock’s slide brings to mind a comment analyst Caroline Stewart of Piper Jaffray made back in October, according to Fortune’s John Simons. “It’s crazy,” she said, “to suddenly say the stock is worth $20 more just because Carl Icahn says it is.” How right she was.