Isis Rally Continues On Phase II Data

Jun.24.13 | About: Ionis Pharmaceuticals, (IONS)

Isis Pharmaceuticals (ISIS) saw significant attention after the FDA approved the apo-B inhibitor Kynamro (mipomersen), despite some hesitance from the FDA advisory committee meeting that was held in October 2012. The concerns were primarily related to lesions that were discovered in patients undergoing clinical testing of the drug and the toxicity of the drug, which is why the drug seems to be incapable of European approval. Also problematic for the homozygous familial hypercholesterolemia (HoFH) indication is the sheer success of Aegerion's (AEGR) Juxtapid (lomitapide), which is significantly more expensive at $295k versus $176k (link) but has better efficacy data.

Although Kynamro is a strong asset that constitutes a large chunk of ISIS' valuation (at least 40-50% if based on analyst revenue estimates for the next few years), investors are also seeing a lot of potential in the company's platform technology. RNA-inhibiting antisense molecules are difficult to use on patients due to their size and instability, which makes ISIS' success with Kynamro all the more impressive. Going forward we are hoping to see similar results in the rest of ISIS' huge pipeline, which includes over a dozen partnered compounds.

Despite a strong sell-off in the broader markets this morning (which hit high-volatility biotechnology stocks particularly hard), ISIS is up 16.5% at the time of writing and climbing on detailed data released from a Phase II study of ISIS-APOCIIIRx in patients with high triglycerides (TG between 200 and 500 mg/dL) and type 2 diabetes. What was particularly impressive was the 88% reduction in Apoc-III and the 72% reduction of triglycerides (plus a 40% increase in high-density lipoprotein cholesterol with no rise in low-density lipoprotein cholesterol) which adds more data to confirm not only that this particular drug is extremely potent but that ISIS' platform is working as intended.

ISIS-APOCIII is being developed as treatment for patients that are at (very) high-risk of cardiovascular disease development and pancreatitis. For patients with extremely high triglyceride levels (>500 mg/dL) there are very limited treatment options at this point, which allows ISIS-APOCIII to target a niche market that is comparable to the HoFH market that is being fought over by Kynamro and Juxtapid. A lack of alternative treatment options may also allow ISIS to market this currently unpartnered drug at a very high price, which may allow the company to swing into EPS-positive territory by 2017. These data may also entice another big pharma partnership, which means royalty payments and reduced R&D expense.

Going into the last five months of 2013 we are also looking for data from the CRP inhibitor ISIS-CRP Rx, which is in Phase II trials for rheumatoid arthritis. This compound is in another highly lucrative indication, and also remains unpartnered up to this point. This adds more upside potential to ISIS, although investors should note that ISIS has had a tremendous run throughout the last 7-8 months and has a much less favorable risk/reward as the company prepares to take the aforementioned compounds into Phase III development.

(Original Post)

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.