The business stories that matter, by Fortune's Colin Barr
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February 27, 2008, 3:45 pm

New Tysabri worries hit Elan

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.

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Colin Barr covers business and finance for Fortune.com. Previously he was an editor at TheStreet.com and author of the weekly Five Dumbest Things on Wall Street column, and an editor at Dow Jones Newswires.
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