The shares of pharmaceutical/biotech companies Elan (ELN) and Biogen Idec (BIIB) are getting severely punished in trading today, after the companies filed an SEC report which showed that two patients taking their drug TYSABRI, came down with progressive multifocal leukoencephalopathy (PML).

PML is a rare inflammatory disorder that causes damage to the material that covers nerves. This PML related nerve damage tends to occur within the white matter of the brain. The disorder is caused by the JC virus that is found in a lot of people but usually causes no symptoms. However, for people with poor immune function, progressive multifocal leukoencephalopathy is triggered.

Wall Street might be using an extra big stick to beat down the shares, because justa month ago, Biogen Idec (BIIB) put out a press release to celebrate the second anniversary of TYSABRI as a treatment for relapsing forms of multiple sclerosis. In it, the company pointed out that “there have been no confirmed cases of progressive multifocal leukoencephalopathy (PML) since re-launch in the US and the first international approval in July 2006. ”

So the new news is quite a shock to the investment community and shareholders and as a result, the stocks of both companies are being sold off. Elan (ELN) is off 44% to $11.07 and Biogen Idec (BIIB) is off $17.71 or 25%, to $52.05.

It has not been a good week for shareholders of Elan (ELN) at all. This is the second body blow for investors in ELN shares just this week. On Tuesday July 29th, the stock closed at $33.75. The next day, the stock closed at $19.63, a 41% loss. This was after the company presented at an Alzheimer’s conference, and analysts came away thinking the company’s Alzheimer’s drug might not be that effective.

In that case as well, Elan did not go in alone, it dragged down its partner Wyeth (WYE) as it is doing to Biogen Idec (BIIB) now. Since last Friday exactly a week ago today, ELN shares have lost 65%.

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