Shares of Biogen Idec Inc. and Elan Corp. fell sharply in late trading Thursday, after the companies said their multiple sclerosis drug Tysabri has been linked to two new cases of a rare and often fatal brain inflammation.

Shares of Biogen Idec fell over 18%, while shares of Elan dropped over 39% in after-hours trading, following the disclosure. 

Tysabri has been linked to a rare condition called progressive multifocal leukoencephalopathy (PML), where the white matter in the brain becomes inflamed.

The drug was taken off the market briefly following its 2004 Food and Drug Administration approval, when it was linked to three deaths from PML. 

Tysabri was allowed back on the market in 2006 after no other cases had been identified. 

In a regulatory filing late Thursday, Biogen and Elan said they’ve notified regulatory agencies Friday that they recently received notifications of two diagnoses of PML in multiple sclerosis patients “in the European Union.” 

The companies said they will host a conference call Friday to discuss the matter. 

Biogen and Elan earlier this month announced that Tysabri was being used on more than 31,800 patients as of the end of June, two years after the drug was re-launched following a safety recall.

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Tysabri was withdrawn from the market in Feb. 2005, just three months after its launch in the U.S. 

Earlier this week, Elan reported that study results for its Bapineuzumab Alzheimer’s disease drug provided mixed results, sending its shares sharply lower.

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