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PDL BioPharma's Best Hope

By Brian Lawler – Updated Apr 5, 2017 at 5:23PM

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The data on daclizumab for multiple sclerosis is encouraging.

On Thursday, PDL BioPharma (NASDAQ:PDLI) and partner Biogen Idec (NASDAQ:BIIB) announced data from a phase 2 study of daclizumab -- its best hope for bringing an in-house compound to market -- as a treatment for multiple sclerosis.

Ever since PDL BioPharma suspended further clinical work with lead drug Nuvion, daclizumab has become its lead pipeline drug candidate.

Since 1997, Roche has marketed daclizumab in the U.S. to help prevent organ rejection for transplant patients. Biogen Idec received its approximate 50% stake in the drug's use for multiple sclerosis when it signed a collaboration deal with PDL BioPharma for three compounds back in 2005.

Back in March, PDL BioPharma and Biogen Idec first announced that daclizumab had met the primary goal of the phase 2 trial, which was reducing a type of lesion associated with multiple sclerosis compared with Avonex alone: Daclizumab and Avonex together reduced the number of new or worsening lesions by 72% after about six months of treatment.

Biogen Idec has acknowledged that the number of multiple sclerosis-related lesions "often do not correlate with changes in the clinical status of patients." On what I'd argue is the more meaningful objective -- reducing the annualized relapse rate (a secondary objective in the study) -- daclizumab reduced this rate compared with the placebo by about 35%, although not in a statistically significant manner, possibly because the study was small (230 people).

Without longer-term data, it's hard to make any firm determinations about the future of daclizumab as a treatment for multiple sclerosis. Drugmakers have had little success in developing combination therapies for the disease. With such potent effects on the immune system, the side effects can add up when these drugs are used in combination. That is what Biogen Idec and Elan (NYSE:ELN) learned the hard way with Tysabri, and the drug had to be pulled from the market for more than a year until the company figured out that it couldn't be used in combination with other immunomodulators.

Biogen Idec and PDL BioPharma are testing daclizumab as a monotherapy in another phase 2 study that is scheduled to start by the end of the year. This trial will provide more useful information about the drug's potential marketability as a multiple sclerosis treatment.

Monotherapy versus combination use matters because an indication allowing daclizumab's use by itself would be much more valuable to PDL BioPharma (or its future owner), since insurers and other payers may balk at paying the high expense of daclizumab and Avonex together if the benefits of combined use aren't significant enough.

The data released last week isn't exciting enough for me to hail daclizumab as the next blockbuster MS therapy, but it definitely supports continued development. Plenty of questions about the drug's future still remain, but this is one PDL BioPharma compound that is still a viable drug candidate.

PDL BioPharma is a active pick from our Rule Breakers newsletter, and Biogen Idec is a Stock Advisor recommendation. Not sure which one to pick? Take a free 30-day test drive of any of our newsletters.

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

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