UPDATE 1-Biogen, Elan report Tysabri brain disease cases

(Adds Biogen comment, background)

LOS ANGELES, July 31 (Reuters) - Biogen Idec Inc (BIIB.O) and Elan Corp Plc (ELN.I) notified regulators of two confirmed cases of a potentially deadly brain disease in multiple sclerosis (MS) patients being treated with Tysabri.

The news on Thursday sent shares of Biogen down about 23 percent, while Elan's shares fell 45 percent in New York.

Sales of the drug, marketed by both companies, were suspended in 2005 after three patients developed a brain infection known as progressive multifocal leukoencephalopathy (PML).

Tysabri returned to the market in 2006 with warnings after the U.S. Food and Drug Administration decided MS patients willing to accept the risks, should be able to have access to the drug's potential benefits.

The two new PML patients, one of whom is hospitalized, are in the European Union, the companies said.

"We've said all along, and the FDA has also stated and it's clearly outlined in our label that we expect to see additional cases of PML," Biogen spokeswoman Naomi Aoki said. "These are the first cases we've seen since the reintroduction in the U.S. and approval in Europe two years ago."

She said the company believes that heightened clinical vigilance has been the best way to monitor for PML and that heightened vigilance was critical in identifying these cases.

Tysabri, co-marketed by Ireland's Elan and Cambridge, Massachusetts-based Biogen, also won U.S. approval this year to treat adults with moderate to severe Crohn's disease who have had a poor response to, or cannot take, other therapies.

Shares of Biogen, which closed at $69.76 on Nasdaq, fell to $53.68 after hours, while shares of Elan, which closed at $20.05 on the New York Stock Exchange, were trading at $11.00. (Reporting by Deena Beasley and Bill Berkrot; editing by Jeffrey Benkoe)