PDL's Friend Comes Through

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For drug developers heavy on good drug candidates but lacking the resources to take advantage of them, it makes sense to find a deep-pocketed partner to help bring these compounds to market. PDL Biopharma (Nasdaq: PDLI) made such a deal two years ago, when it signed a co-development deal with the much bigger Biogen Idec (Nasdaq: BIIB) to help advance three of its drug candidates.

Earlier this week, PDL announced that the deal has already started bearing fruit with the successful conclusion of a phase 2 trial for daclizumab as a treatment for multiple sclerosis. No data was released from the trial, except for word that it was successful on the primary endpoint of reducing the number of MS sufferers' new lesions after six months. This sounds favorable, but patients were also being treated with another MS therapy, and six months is not nearly enough time to establish the drug's safety profile in this chronic indication.

Based on these results, PDL and partner Biogen are starting a clinical trial to test daclizumab in MS patients as a single therapy. This is sure to a much more relevant study, since any combination use of these expensive drugs will be tougher to get insurance companies to pay for and is fraught with other risks. Biogen and partner Elan (NYSE: ELN) learned that two years ago, with Tysabri running into trouble in combination therapy.

Just as PDL deserves blame for its blunders, it should also get credit for its smart moves. Partnering out daclizumab to the leader in MS treatments has advanced the drug's development in this indication much more rapidly than PDL probably could have done on its own with its limited resources. If PDL could come up with a similar deal for heart treatment Ularitide, then investors would be smiling even more.

PDL Biopharma is a Rule Breakers recommendation. Biogen Idec is a Stock Advisor selection. Check out either service free for 30 days.

Fool contributor Brian Lawler does not own shares of any company mentioned in this article. The Fool has a disclosure policy.