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Elan Corporation (NYSE: ) shares opened higher on Monday after falling sharply last week after more safety concerns hit its Tysabri drug. Reports about new potentially deadly infections linked to the MS drug have many investors concerned that some physicians will steer patients away from the therapy while also raising some questions about whether it's effective long-term. The same infection was discovered in 2005 when the drug was pulled from the market, but it returned in 2006 with a warning to consumers.

Elan and Biogen had estimated that roughly one in a thousand users may be at risk for a deadly brain disease and the latest cases are well within that range. While these cases may have been expected, many analysts are concerned that physicians will be increasingly worried. The companies had planned to hit their goal of 100,000 users by 2010 and that could be difficult if there is a drop in the number of recommendations. The big question is how concerned the medical community will react to the news.

Many analysts believe that the market has now taken out all of the value of Tysabri and it seems unlikely that they will reach their prior targets. However, others point to the fact that this same thing happened in 2005-6 when the first scare hit the market. Still, Tysabri managed to bank $200 million in the second quarter alone with 31,800 patients on the treatment. So, just how devastating this new news really is depends largely on doctors - but investors appear to be following the analysts.

Elan also took a hit last week on safety concerns about its Alzheimer's drug bapineuzumab. The serious side-effects reported during intial tests included a brain-swelling condition called vasogenic edema. If approved, many analysts believe that bapineuzumab could be an $8 billion drug, which has much of Wall Street mesmorized. Some investors believe there is still hope with this drug as well, as many of the patients that reported the side-effects went back onto the drug afterwards - it's a high risk, high reward drug.

Elan Corporation shares rose $1.07, or 10.88%, to $11.01 on the day.

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