Expecting Isis Stock to Rise on Abbott Purchase

Isis Pharmaceuticals, Inc. (NASDAQ:ISIS) is a biopharmaceutical company that focuses entirely on RNA-based technologies and primarily, on antisense therapies.

Here’s my take on what that means…

The scientists at Isis seek to treat disease by first identifying the sequence of a gene known to have a causative role in that disease.

They then synthesize a strand of nucleic acid (DNA, RNA or a chemical analogue) to bind to the messenger RNA (mRNA) produced by that gene and to modify it or in effect, turn the gene “off”.

It’s that synthesized nucleic acid that is called an “antisense”. (The unblocked gene’s mRNA is called the “sense” sequence.)

The folks at Isis have been working with this technology for years. Back in 1998, the company received marketing clearance for the world’s first antisense drug. That same drug, Vitravene (now marketed by Novartis), has been approved by the FDA for the treatment for cytomegalovirus retinitis.

Antisense drugs could prove the key to the treatments of various cancers, diabetes, ALS, Duchenne muscular dystrophy, etc…

But why invest today?

It was announced Tuesday that Abbott Laboratories (NYSE:ABT) will be exercising an option to purchase Ibis Biosciences, Inc., a subsidiary of Isis, for $175 million. This is in addition to payments for post-closing sales of Ibis systems and equipment.

This will bring a nice boost to Isis who just last quarter saw a net profit margin of 5.32%. I know that doesn’t sound like much, but actual profits for drug discovery outfits aren’t always the norm.

I recommend you buy shares of Isis Pharmaceuticals, Inc. (NASDAQ:ISIS) at or under $13 and hold on for double-digit gains.

Disclosure: no positions