The R&D Tax Credit Aspects of Multiple Sclerosis

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        More than 2.3 million people suffer from Multiple Sclerosis (MS) around the world. Multiple Sclerosis is a disease that affects the central nervous system where the immune system attacks myelin and nerve fibers. Myelin is the fatty substance that surrounds and insulates nerve fibers. So once the nerve cells are exposed, it can cause the nerve impulses to be distorted or interrupted. This disturbance usually leads to serious symptoms, such as trouble with vision, numbness, balance and coordination issues, bladder problems and cognitive inabilities.  

        Most people are diagnosed with the disease between the ages of 20 to 50 and it is more likely to be seen in women than in men. Certain medications have been developed to help improve symptoms associated with this disease, however researchers have not discovered a successful treatment to completely cure Multiple Sclerosis.  Research and innovation efforts towards reducing MS are eligible for federal and state R&D Tax Credits.

The Research & Development Tax Credit

        Enacted in 1981, the federal Research and Development (R&D) Tax Credit allows a credit of up to 13 percent of eligible spending for new and improved products and processes. Qualified research must meet the following four criteria:

                  • New or improved products, processes, or software
                  • Technological in nature
                  • Elimination of uncertainty
                  • Process of experimentation

        Eligible costs include employee wages, cost of supplies, cost of testing, contract research expenses, and costs associated with developing a patent. On December 18, 2015 President Obama signed the bill making the R&D Tax Credit permanent.  Beginning in 2016, the R&D credit can be used to offset Alternative Minimum Tax and start up businesses can utilize the credit against $250,000 per year in payroll taxes.

Stages of MS

        There are four possible stages patients of MS may go through:   

  1. Relapsing-remitting MS (RRMS): This is the most common form of MS. In this stage people can have relapses, which are followed by partial or complete recovery periods where symptoms can improve.
  2. Secondary-progressive MS (SPMS): Most people will usually shift to SPMS from RRMS where the disease will develop progressively with or without relapses.
  3. Primary-progressive MS (PPMS): Around 10% of people have PPMS. Neurologic functions begin to deteriorate and there are no particular periods of relapses or remissions.
  4. Progressive-Relapsing MS (PRMS): This stage is the least diagnosed form of MS. Some form of recovery may or may not occur and at this point there is no remission while the disease advances.

        MS is difficult to diagnose because symptoms may be non-specific to disorders of the central nervous system. If a patient has symptoms, they may occur and then disappear making diagnosis even more challenging.  To diagnose a patient with MS, there must be evidence of damage in at least two different areas of the central nervous system, evidence that damage occurred at least one month apart,
and ruling out any other diagnoses.  To properly identify the disease, MRI tests, neurologic exams, Evoked Potentials (EP), and a spinal fluid analysis can be conducted as well as analyzing a person’s medical history. Developments are underway for new methods and technology in accurately diagnosing the disease.

Developments in MS Diagnosis

        Companies focusing development efforts on creating more advanced diagnosing methods for Multiple Sclerosis are eligible for R&D Tax Credits.

Google & Biogen
        Google has partnered with Biogen Idec Inc. to study how environmental and biological factors affect the development of MS. Biogen, based in Massachusetts, develops and manufactures drugs for neurological, autoimmune and rare diseases including MS. Both Google and Biogen utilize sensors, software, and data analytics tools to collect data from patients.  Together all of this equipment  will assist researchers in analyzing how the disease differs between each patient. Studying these factors can assist in creating an approach to treat the disease early on before serious symptoms occur.
The Cleveland Clinic
        The Cleveland Clinic has released a study discussing the advantages of using an assessment application called the Multiple Sclerosis Performance Test (MSPT). MSPT is a tool that targets five performance areas of an individual, including a walking speed test, balance test, manual dexterity test, processing speed test and a low contrast acuity test.  The MSPT is utilized on iPads because the device provides high quality sensors to capture a participant’s movement during tests. A great aspect of this tool is that it could be transformed to test patients at home. This alternative provides accurate results since the patients would be in their normal environment and their movements can be tracked throughout the day. MSPT applies computer technology, information technology, biomechanics, and clinical measurement science to provide quantitative data for analysis. The MSPT application also assists with tracking an individual’s cognitive skills for physicians to analyze and find the most efficient treatment for the patient.

Royal Melbourne Hospital
        Australian Dr. Frank Gaillard and fellow scientists from the Royal Melbourne Hospital have developed new software that aids physicians in detecting brain lesions caused by MS. This new software may lead to an earlier detection of brain tumors as well as other diseases.  As of now, finding the right treatment for patients involves looking through a number of scans to search for new lesions in the brain, which can be time consuming. This new technology can identify minute changes in the brain by detecting an image that wasn’t shown in previous scans. Physicians save time with this technology because instead of trying to find new lesions, the focus is now on determining if the lesion is caused by MS or another cause. This software is currently being used in live scan procedures to assist doctors in determining drug compatibility.

Potential Stem Cell Therapy
        Recent discoveries have concluded that certain drugs can activate stem cells  in the brain to stimulate myelin producing cells and repair white matter, both of which are damaged in MS patients. Myelin is a type of insulator that allows for the communication between brain cells. Oligodendrocyte progenitor cells (OPCs) are cells that generate myelin-producing cells. For people who have MS, OPCs usually multiply but they aren’t effective in restoring white matter.  Dr. Paul Tesar from the Case Western Reserve School of Medicine in Cleveland worked with Dr. Robert Miller from the George Washington University School of Medicine and Health Sciences to test the effects of certain drugs on stem cells. Their research discovered that two compounds, micronazole (an antifungal) and clobetasol (a steroid), both encouraged mouse and human OPCs into creating myelin-producing cells. Due to the increase in myelin, reverse paralysis was seen in some of the mice with multiple sclerosis.  This breakthrough shows that stem cell therapy of OPCs may be a future treatment available to individuals with MS. In depth research is still underway to determine if stem cell therapy would be successful for human treatment.  


        Future research for MS will likely include studying genetic factors of individuals. There are several possible causes believed to be linked to MS, including family history of the disease, smoking, vitamin D deficiency, and people who are of Northern European descent. The Multiple Sclerosis Genetics Group is focused on studying how heredity may affect the development of MS. The whole genome of participants from a study was analyzed by researchers to identify which chromosomes are affected by the disease. During experimentation, 19 different sections of chromosomes were found to be linked to MS, which supports the theory that several genes are influenced if an individual develops the disease.  

        The Multiple Sclerosis Genetics Group analyzed this data along with other genetic results from research groups in Canada, Finland, and England. Combining all of the data together,  the first MS genetic map was created  which allows scientists to learn more about the disease. Genes have an impact on the risk, age, and severity of obtaining MS, as well as a role in how a person may respond to certain drugs.

Potential Medicine in Development

        Companies focusing drug and treatment developments for relieving and curing Multiple Sclerosis are eligible for R&D Tax Credits.

        Biogen’s development of an injectable called Plegridy which is similar to its previously released Avonex, received U.S. regulatory approval to go to market.  Plegridy is a longer lasting treatment that assists patients who suffer from relapsing-remitting multiple sclerosis. This medication contains an active ingredient, interferon beta that is also in Avonex. What makes Plegridy different from Avonex is the addition of a polymer, polyethylene glycol, which increases the exposure of the drug.  This allows patients to take fewer doses, so Plegridy only has to be injected into the muscle every two weeks. The development of Plegridy gives patients with MS more advanced medication options.

        Teva and Active Biotech have partnered together to form an MS drug, called Laquinimod. Laquinimod is a type of oral medication under development targeted to aid people who have relapsing-remitting multiple sclerosis. It is efficient at reducing relapse rates and may reduce acute and chronic disability.  The medicine is currently up to Phase III trial, which is designed to assess the safety and efficiency of the drug. One of the reasons this study is being conducted is to reinforce that the pill is an adequate size for patients to consume. Patients will undergo 24 months of treatment in this testing phase.  

        Daclizumab also known as Zenapax, is an injectable drug aimed at reducing new or enlarged lesions in the brain for people with relapsing remitting multiple sclerosis. Studies have found improvement after just a year of treatment where people had fewer relapses. There have been various trials conducted to study the drug and its effects consisting of the CHOICE, SELECT and DECIDE trials. The CHOICE trial had 230 participants on interferon beta for six months. People were divided into two groups, one taking a high dose of daclizumab, one taking a low dose of daclizumab or a placebo. The daclizumab was given to patients every two weeks or every four weeks through a period of 24 weeks. Participants were then studied for another 48 weeks. The higher dosage group showed a 72% reduction in active lesions and the lower dosage set showed a 25% reduction compared to the placebo group.

        The SELECT trial consisted of 600 people with relapsing remitting multiple sclerosis, where 150 mg of daclizumabm, 300 mg of daclizumab or a placebo were injected into the subjects. For 52 weeks, participants took the drug every four weeks. The 150 mg dosage had a higher success rate compared to the 300 mg, by providing participants with a decrease in the annual relapse rate and disability progression.

        The DECIDE trial compared daclizumab 150 mg with interferon beta 1a (Avonex) in more than 1800 patients for two years or longer. People received 150 mg of daclizumab every four weeks or Avonex every week. Daclizumab had a lower relapse rate and 54% fewer lesions in patients when compared to Avonex.  

        Ocrelizumab is an injectable drug in development aimed for people with relapsing remitting and primary progressive multiple sclerosis. Initial drug studies have shown a reduced amount of brain lesions. This drug targets an indicator (CD20) on B cells, which is thought to influence a person’s immune system caused by the attack of myelin around the nerves. Previous studies have shown that ocrelizumab for relapsing remitting MS works twice as well compared to current medicines. A phase II experiment was conducted for 24 weeks on 218 people who had relapsing remitting MS.xv Groups included one given either 600 mg of ocrelizumab, 2000 mg of ocrelizumab, Avonex, or a placebo. At the end of the trial, the annual relapse rate was .13 in the low dose group and .17 in the high dose group of ocrelizumab. The annual relapse rate for patients who received Avonex was .36 and .64 for people who were on the placebo.

        A phase III trial is currently studying the further effects of ocrelizumab for primary progressive MS. Participants will receive 600 mg of the drug by IV infusion or a placebo every 24 weeks. This study will be implemented over a period of two years. The purpose of this research is to examine how ocrelizumab affects a person’s disability progression. After four doses of medication, there were no signs of the disease further progressing according to MRI scans.xv During experimentation, ocrelizumab has shown to delay the symptoms associated with primary progressive MS by 12 weeks.


        Continuing research efforts are focusing on finding effective MS diagnosis tools and drug treatment. Although there has not been a breakthrough for a drug to end the disease, scientists are still experimenting with new drugs and methods to try and find a cure. R&D Tax Credits are available help stimulate and support companies engaged in developing innovative processes and solutions for MS.

Article Citation List



Charles R Goulding Attorney/CPA, is the President of R&D Tax Savers.

Lauren Chin is a Tax Analyst at R&D Tax Savers.

Andrea Albanese is a Manager with R&D Tax Savers.

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