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As discussed in earlier parts of this series (starting with part one), risk mitigation is crucial in successful small biotech investing and key to this strategy is finding companies with big, robust pipelines.

Ligand Pharmaceuticals (NASDAQ:LGND) and Isis Pharmaceuticals (NASDAQ:ISIS) with market capitalizations of $315 million and $820 million are companies that have large, promising pipelines.

Ligand Pharmaceuticals

Ligand Pharmaceuticals, based out of La Jolla, California, has a large and diverse developmental pipeline addressing multiple disease areas. With 8 marketed products and over 60 programs in development-many of which are partnered with big pharma/biotech companies-the company has developed a portfolio that is one of the largest when compared to its competition.

Already approved for use in chronic immune idiopathic thrombocytopenic purpura, Eltrombopag or Promacta-a compound partnered with GlaxoSmithKline (NYSE:GSK)-is currently in phase III trials for treating thrombocytopenia from chronic hepatitis C infection. Thrombocytopenia, or deficiency of platelets in the blood causes bleeding, slow clot formation, and bruising and is often a limiting step in treating patients with interferon and ribavirin in advanced hepatitis C infections. Promacta is able to increase platelet count, permit initiation of antiviral treatment, prolong antiviral therapy, and in studies, demonstrate a greater sustained virologic response when compared to placebo. If approved, as estimated by UBS AG, sales of Promacta for GlaxoSmithKline and Ligand can reach $2 billion dollars and achieve blockbuster status.

Furthermore, in the pipeline, a NDA is expected to be filed in 2012 for Aprela, a partnered compound with Pfizer (NYSE:PFE). Aprela is a once daily, orally administered medication used to reduce menopausal symptoms such as hot flashes and osteoporosis. In studies, Aprela has demonstrated a better side effect and safety profile relative to older hormonal replacement therapies

Aside from drug partnerships, Ligand is receiving milestone and low single to double-digit royalty payments for Captisol, a technology that improves the pharmacokinetics, stability, and solubility of drugs. This technology is used in 5 of their 8 FDA approved and partnered products and is showing promise in the Captisol-enabled melphalan program.

Listed below are compounds that are currently in clinical/preclinical trials, many of which are partnered with big pharma/biotech companies:

Program

Partner

Indication

Clinical Trial Status

Fablyn

Chiva

Osteoporosis

NDA

Carfilzomib

Onyx (NASDAQ:ONXX)

Oncology

Phase III

Carbamazepine-IV

Lundbeck

Central Nervous System

Phase III

Undisclosed Captisol Program

Merck (NYSE:MRK)

Undisclosed

Phase III

Promacta

GlaxoSmithKline

Hepatitis C

Phase III

Aprela

Pfizer

Menopause

Phase III

Clopidogrel-IV

The Medicines Company (NASDAQ:MDCO)

Anti-arrhythmia

Phase II

Promacta

GlaxoSmithKline

Oncology

Phase II

Dinaciclib

Merck

Oncology

Phase II

Tanzisertib

Celgene (NASDAQ:CELG)

Pulmonary Fibrosis

Phase II

Tanaproget

Undisclosed

Contraceptive

Phase II

GSK2285921

GlaxoSmithKline

Idiopathic thrombocytopenic purpura

Phase II

Delafloxacin

Rib-X

Infection

Phase II

Pradefovir

Chiva

Hepatitis B

Phase I

MB01733

Chiva

Hepatocellular carcinoma

Phase I

XL652

Exelixis (NASDAQ:EXEL)

Atherosclerosis

Phase I

XL550

Exelixis

Metabolic disorders

Phase I

CXCR4

Proximagen

Inflammation

Preclinical

Undisclosed

SAGE

Central Nervous System

Preclinical

Additionally, Ligand has more than 25 undisclosed partnered Captisol-enabled programs and 5 unpartnered programs.

Ligand has a market capitalization of $315 million and currently trading at $15.96 with a 52-week range of $9.16 - $16.24. The company has approximately $17 million in cash and equivalents, $10 million in short-term debt, and $29 million in long-term debt.

Isis Pharmaceuticals

An innovator and leader in antisense-drug development, Isis Pharmaceuticals has a large and broad pipeline that targets a number of disease areas. With over 1,500 issued patents and 27 drug programs addressing areas such as cancer, metabolic, inflammation, and cardiovascular, Isis is well diversified in disease targets.

Mipomersen or Kynamro, a partnered compound with Genzyme/Sanofi (NYSE:SNY), met all primary, secondary, and tertiary endpoints in four Phase III trials. Kynamro is used to treat patients who are at high cardiovascular risk, with very high cholesterol, and who cannot lower their LDL enough with available therapies. Together with Genzyme/Sanofi, Isis plans to file a NDA for homozygous familial hypercholesterolemia in the first quarter of 2012. In July of 2011, a marketing authorization application was submitted to the European Medicines Agency seeking approval of Kynamro for homozygous and severe heterozygous familial hypercholesterolemia.

Also in the cardiovascular space, Isis has a promising compound, ISIS-FXI, in a market that is currently valued at over $7 billion dollars. ISIS-FXI is a factor 11 inhibitor and anti-clotting drug that has demonstrated a better profile than current Factor Xa inhibitors that are on the anti-clotting market. In preclinical models, ISIS-FXI has demonstrated potent anti-clotting activity with no increase in bleeding when compared to current therapies such as warfarin, low molecular weight heparin and Factor Xa inhibitors. ISIS-FXI showed it was safe and well tolerated in phase I studies and plans are in place to initiate phase II studies.

The pipeline at Isis is robust and demonstrates the ability of Isis to generate promising compounds.

Program

Partner

Indication

Clinical Trial Status

Kynamro

Genzyme

High cholesterol

Phase III

ISIS-CRP

Isis

CAD/Inflammation/Renal

Phase II

ISIS-APOCIII

Isis

High triglycerides

Phase I

ISIS-FXI

Isis

Clotting disorders

Phase I

ISIS-APOA

Isis

Atherosclerosis

Preclinical

ISIS-FVII

Isis

Clotting disorders

Preclinial

ISIS-FGFR4

Isis

Obesity

Phase I

ISIS-GCCR

Isis

Type 2 diabetes (2 programs)

Phase I

ISIS-PTP1B

Isis

Type 2 diabetes

Phase I

ISIS-DGAT2

Isis

Nonalcoholic steatohepatitis

Preclinical

OGX-011

Teva (NYSE:TEVA)/Oncogenex (NASDAQ:OGXI)

Cancer

Phase III

ISIS-EIF4E

Isis

Cancer

Phase II

LY2181308

Lilly (NYSE:LLY)

Cancer

Phase II

OGX-427

Oncogenex

Cancer

Phase II

ISIS-STAT3

Isis

Cancer

Phase I

ATL1103

Antisense Therapeutics

Acromegaly

Phase I

ISIS-SMN

Isis

Spinal Muscular Atrophy

Phase I

ISIS-SOD1

ALS Association, Muscular Dystrophy Association

Amyotrophic lateral sclerosis

Phase I

ISIS-TTR

GlaxoSmithKline

Transthyretin amyloidosis

Phase I

ISIS-AAT

GlaxoSmithKline

Alpha-1 antitrypsin deficiency associated liver disease

Preclinical

Alicaforsen

Atlantic

Ulcerative Colitis

Phase II

ATL1102

Antisense

Multiple Sclerosis

Phase II

EXC001

Excaliard

Local Fibrosis

Phase II

iCO-007

iCO

Ocular Disease

Phase II

Plazomicin

Achaogen

Severe Bacterial Infection (gram negative)

Phase II

Isis has a market capitalization of $820 million and currently trading at $8.21 with a 52-week range of $6.25 - $9.49. The company has approximately $65 million in cash and equivalents, $3 million in short-term debt, and $215 million in long-term debt.

Disclaimer: All information is provided for informational purposes only and does not serve as investment advice or an offer of management services. There is no guarantee that the information is accurate. All information is subject to change, amendment, and correction without any notice. Any mention of current and past results does not indicate any future expectations or results. All investments are associated with risks and loss of money. Consult with a professional tax, accounting, legal, and/or investment advisor before making any investment decision.

Source: Large, Diverse Pipelines At Small Biotech Companies