How to proceed with partially stripped soggy shower wall?

We are still in the process of redoing our bathroom and the same thing happened to us. Sheetrock is NOT supposed to go behind tile in a shower. Its supposed to be cement board. My guess is this is in the corner of the tub where the spicket and faucet are? Water has probably pooled up on the inside edge of the tub and soaked through. The sheetrock is not able to be saved... when we pulled off the tile in our bathroom, the sheetrock was like paper and ate up with black mold, which can cause health problems. We ripped all the sheetrock out just for good measures. We found once we got further into it that right above the seam of the sheet rock (they were laying horizontally) was water damaged too but not nearly as bad as lower portion. Its better to do it all, right the first time than in a few years have this problem on the sheetrock above this. We decided against putting tile up again and put up shower walls instead. You can buy paper less sheetrock or green board. The lowes here didnt sell greenboard anymore... Dont you love how you PLAN on doing a small thing and it turns into a whole over haul? *sigh* me too! Good Luck!