Biogen Idec

(BIIB) - Get Report

and

Elan

(ELN)

insist there's no reason to read anything negative into their decision, announced Tuesday night, to keep the all-important clinical data on their new multiple sclerosis drug Antegren a secret until the Food and Drug Administration decides on the drug's approvability. That decision is expected in late November.

In research notes published last night and this morning, sell-side analysts covering Biogen Idec are expressing some disappointment with the decision but are generally taking the company at its word. Call me a glass-half-empty guy (it won't be the first time), but this latest development has me wondering whether there's something amiss with Antegren.

Biogen Idec shares were down 64 cents to $57.70 in recent trading, and shares of Elan were down 32 cents to $20.25.

Highly Anticipated Data

It was hoped that the companies would present one-year data from two pivotal Antegren clinical studies at a European meeting of multiple sclerosis doctors in the first week of October. The companies told us in February that these data are positive, and that formed the basis of the Antegren filing with the FDA and caused a

huge run in the stocks of both companies. But a lot of questions about Antegren's commercial potential will remain unanswered until the actual data are made public.

Tuesday night, Biogen Idec and Elan said they needs more time before releasing the one-year Antegren data, because any public presentation now would jeopardize the integrity of the studies, which are designed to collect data on multiple sclerosis patients for two years and are still ongoing.

"While disappointing, this only delays seeing the

Antegren data by about six weeks, as the full one-year data should be available in the package insert, assuming approval around the FDA action date at the end of November," said UBS biotech analyst David Molowa, in a research note.

The FDA still may decide to bring Antegren in front of an advisory committee meeting, possibly in October; that would be the first forum for a presentation of the data, he adds. Molowa has a neutral rating on Biogen Idec due to valuation. His firm has a banking relationship with the company.

But this upcoming medical meeting, the European Committee for the Treatment and Research in Multiple Sclerosis, is very high profile. If the Antegren data are good, why wouldn't Biogen Idec and Elan want to be there, Antegren data in hand? Wouldn't this be the perfect forum to wow doctors with data showing Antegren's stellar performance? I understand the need to protect the integrity of ongoing studies, but six weeks isn't that long, especially for a drug like Antegren that is dosed monthly. I find it hard to believe that making Antegren data public just a tad early would really affect the studies.

(Relative) Performance Matters

Remember, the issue is not whether or not Antegren is an approvable drug. The unanswered questions, instead, center on how well the drug stacks up to current multiple sclerosis drugs, including Biogen Idec's own Avonex, which already pulls in more than $1 billion in annual sales.

Biogen Idec and Elan are testing Antegren as both a stand-alone therapy in multiple sclerosis and in combination with Avonex. But if the combination treatment isn't superior to monotherapy, or if the two treatments show equal efficacy, how will doctors fit Antegren into their multiple sclerosis practices? Will they reserve Antegren for use in patients who don't respond well to Avonex or

Serono's

(SRA)

Rebif, for example, or will they decide to switch patients off these older drugs and onto Antegren immediately? Even this latter scenario could cause problems for Biogen Idec, because it may cannabilize Avonex sales.

One hedge fund manager, who has been long Biogen Idec at various times and has no position in Elan, worries that the company's decision to keep the Antegren data secret for now suggests that the combination of Antegren-Avonex treatment is not effective enough to justify the high cost of prescribing those two drugs together. If that turns out to be true and Antegren is only used as a stand-alone therapy, Biogen Idec and Elan face a much more difficult competitive landscape.

"If the combination of Antegren and Avonex doesn't work, then I foresee doctors reserving Antegren for use as a second- or third-line treatment behind existing multiple sclerosis drugs; or in other words, doctors will use Antegren in patients that are unwilling or unable to take current multiple sclerosis drugs," this hedge fund manager says. "The problem with this scenario is that a good part of the current valuations of Biogen Idec and Elan are based on the assumption that Antegren will be used as a front-line treatment, which is a much larger market."

There are some who argue that Biogen Idec and Elan will price Antegren at such a premium -- $25,000 per course of treatment, for example, compared with $13,000 to $17,000 for the existing drugs like Avonex and Rebif -- that it won't matter how the drug is used, the companies will still generate the revenue they need to justify their lofty valuations.

But an ultra-premium price is also bound to attract the scrutiny of insurers, which will want to make sure that the extra cost is justified by the drug's efficacy or better safety profile. And don't forget that changes in Medicare reimbursement set to go into effect next year make it less financially attractive for doctors to prescribe intravenous drugs such as Antegren in their offices.

Biotech and drug investors, of course, never wait for all the facts before placing their bets on exciting new drugs, which is why Biogen Idec and Elan have outperformed their peers this year and now carry fairly hefty valuations. Whether or not these bets will eventually pay off depends on exactly what kind of drug Antegren really is. Unfortunately, Biogen Idec and Elan are making everyone wait longer than they'd like for answers.

Adam Feuerstein writes regularly for RealMoney.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. He invites you to send your feedback to

adam.feuerstein@thestreet.com.