Biogen Idec

(BIIB) - Get Report

and

Elan Pharmaceuticals

(ELN)

gave us a peek Monday at strong clinical data on their multiple sclerosis drug Antegren.

But while Antegren looks to be living up to some of its hype, questions still remain.

Multiple sclerosis patients taking Antegren reported a 66% drop in relapse rates compared with patients taking a placebo, according to one-year data from a two-year, phase III study. Biogen Idec and Elan expect this data to convince the Food and Drug Administration to approve Antegren at the end of November.

In terms of efficacy, a 66% reduction in the relapse rate at one year catapults Antegren to the top of the heap -- the drug appears to be stronger than Biogen Idec's existing MS drug Avonex, as well as

Serono's

(SRA)

Rebif and

Chiron's

(CHIR) - Get Report

Betaseron.

But the finding isn't a great surprise -- everyone knew that Antegren works very well on its own. What remains a mystery is how well it works in combination with Avonex. The answer is very important to Biogen Idec because the company would much prefer Antegren's commercial success to come without significant

cannibalization of Avonex sales.

Elan, of course, doesn't have an existing multiple sclerosis drug franchise to protect, so it doesn't care how Antegren succeeds.

These somewhat divergent interests certainly make for an interesting partnership, and could explain why Biogen Idec closed Monday down 47 cents to $60.40, while Elan was up $1.12, or 4%, to $29.

While Monday's Antegren data does start to bring the expected approval and launch into better focus, so much of the story here is still fuzzy. This has some sell-side analysts walking a fine line.

Merrill Lynch's Eric Ende reiterated his buy rating on Biogen Idec Monday and made no changes to his Antegren and Avonex sales estimates. But at the same time, Ende acknowledges that if Antegren steals a significant swath of patients from Avonex, the net effect on Biogen Idec's profit is likely to be negative, even if Antegren also steals patients from other competing MS drugs. (Merrill Lynch has received compensation for noninvestment banking services from Biogen Idec.)

Jefferies biotech analyst Adam Walsh issued a report Monday that echoed these concerns: "The lack of disclosure of the one-year SENTINEL

combination data implies to us a less robust dataset, which magnifies our concerns that Antegren will cannibalize Avonex," he wrote. (Walsh has a hold rating on Biogen Idec and his firm doesn't have a banking relationship with the company.)