Isis Sell-Off: Investors Jumping to Conclusions

| About: Ionis Pharmaceuticals, (IONS)

ISIS (see earnings call transcript here) was subjected to a sell-off following the announcement of decidedly positive phase 3 results of the firm’s drug Mipomersen for familial hypercholesterolemia (FH). Some interpreters cited the elevation of liver transaminase enzyme in 12% of patients the reason for the sell-off. They concluded that, although the drug will probably be approved for the rare homozygous familial hypercholesterolemia patients, it might not be approved for other high cholesterol conditions. They believe it would be difficult for the FDA to approve it for heterozygous FH type, which has a large market, or for patients resistant to current treatments, or those who do not tolerate them.

Discussing the subject, Dr. L.Goldstein expressed her belief that the explanation for investors’ dissatisfaction is mere jumping to conclusion without looking carefully at all the facts about the elevated liver enzyme as a side effect of Isis’ drug Mipomersen. There was no comparison between Mipomersen’s side effects and the same side effects caused by the most currently used anti-cholesterol drugs, the statins, and the greater side effects resulting from combinations of these drugs, especially, when the high cholesterol defies the treatment. Combining statins with each other and with other drugs is a common practice in treating hereditary familial hypercholesterolemia and high LDL cholesterol unbending to individual drugs.

The correct way to assess Isis’ breakthrough drug is to analyze the results of the firms trials on heterozygous patients, on the patients intolerant to the current drugs, and those resistant to them. Comparing the elevation of liver enzymes caused by Mipomersen to that caused by combining statins and other prescription and non-prescription drugs – all cause elevation of liver enzymes is indispensable. It is a mere fact that the success of Mipomersen marks a historical event. For the first time an antisense drug has been successfully used systemically. I still remember when I was asked twelve years ago if we would see an antisense therapeutic in the clinic and my answer was, of course we will, but not before ten years. Now we see the hope realized at the hands of Isis, which has become the first firm to successfully use antisense therapeutics systemically to block gene expression.

Dr. Leslie Golstein is in the process of writing an article about the advances achieved towards gene editing, including the use of antisense, RNAi and zinc finger derived products. Among others, she is investigating Mipomersen’s structure and targets, especially its targets, beginning with ApoB 100, which is the target for the treatment of familial hypercholesterolemia.

Mipomersen, is not the only drug in Isis pipeline. The firm has designed and developed several antisense products for various diseases. These are:

ISIS-CRPRx: This drug inhibits C reactive protein (CRP), a liver protein that rises in inflammatory diseases, including Crohn’s disease and rheumatoid arthritis. Excessive amounts of this protein are linked to coronary artery disease and cardiovascular disease progression and other conditions.

BMS-PCSK9Rx: The molecules target proprotein convertase subtilisin/kexin type 9 (PCSK9) involved in the metabolism of cholesterol. Inhibiting PCSK9 increases the number of receptors available to remove LDL-C from the bloodstream.

ISIS-FXIRx: Targets Factor XI, a clotting factor produced in the liver to prevent heart attack and stroke, and;

ISIS-APOCIIIRx: Targets ApoC-III, a lipoprotein that is principally synthesized in the liver and is responsible for triglyceride transport in blood. High levels of ApoC-III are linked to inflammation, atherosclerosis and metabolic syndrome.

Isis is the nearest to cross the finish line, bringing to the clinic gene blocking, or gene editing breakthrough systemically used therapeutics. At this stage, though, the main question is: Will Mipomersen be approved only for the rare homozygous familial hypercholesterolemia as negative investors’ speculate, or will be also approved for other resistant cases of elevated cholesterol?

Many reasons lead us to believe that the drug will also be approved for familial heterozygous hypercholesterolemia, which has a large market. The drug might also be approved, probably later on for other high cholesterol conditions. Investors’ negative feelings towards the drug are based on the elevation in liver transaminase, which was similar in magnitude and duration in all trials on various types of hypercholesterolemia. None of the patients’ laboratory tests indicate liver dysfunction while on the drug. There were no Hy’s law cases. As you know, the Hy’s law comprises a number of criteria that can be used by the FDA and physicians to assess the liver risk vs reward using therapeutic molecules. As we mentioned earlier, the commonly used anti-cholesterol drugs, statins cause liver enzyme elevations, in addition to other adverse effects, including muscle pain - a symptom of muscle breakdown. The possible release of the muscle contents into the bloodstream, a phenomenon known as rhabdomyolysis, would cause acute kidney failure – a rare but not discarded complication of anti-cholesterol drugs’ side effect. Currently, to lower resistant cholesterol and familial hypercholesterolemia, physicians are using combinations of statins and other drugs – all potentially elevate liver enzymes.

Our inclination is to believe that Mipomersen has the chance to be approved for hetozygous familial hypercholesterolemia and, hypercholesterolemia resistant to current treatments, in addition of course, to the expected approval for homozygous FH.

With regard to Isis’ value, in addition to the firm’s success in developing a marketed local antisense drug for macular degeneration, and now in developing systemic antisense therapeutics that are given to hundreds of patients in clinical trials, the firm and Alnylam (NASDAQ:ALNY) have formed a company called Regulus Therapeutics. This firm, we believe, has already brought value to both Isis and Alnylam.

Rugulus Therapeutics

Isis and Alnylam established Rugulus to develop microRNA, - small RNA molecules that regulate gene expression. It is believed that more than one-third of all human genes are regulated by microRNAs. A single microRNA can regulate entire networks of genes, making microRNA the master regulators of the genome. microRNAs play an integral role in the immune response, cell-cycle control, metabolism, viral replication, stem cell differentiation and human development. Many microRNAs are modulators of critical biological pathways and their expression or function is significantly altered in cancer, heart failure and viral infections. Targeting microRNAs opens the door for a novel class of therapeutics that treat diseases by modulating entire biological pathways. We are, indeed, in the future.

Regulus has recently renewed collaboration with GlaxoSmithKline (NYSE:GSK) to develop microRNA therapeutics targeting microRNA-122 for many diseases, particularly Hepatitis C Viral infection (HCV). Liver-expressed miR-122 has been shown to be a critical endogenous “host factor” for HCV replication. An anti-miRs targeting miR-122 has blocked HCV infection. (Jopling et al. (2005) Science 309, 1577-81).

Scientists at Alnylam and Isis had demonstrated the feasibility of antagonizing miR-122 in vivo. Regulus scientists demonstrated that inhibiting miR-122 results in significant inhibition of HCV replication in human liver cells - a novel therapeutic strategy for HCV. Multiple preclinical studies confirmed these conclusions. Regulus plans to identify a clinical development candidate in the second half of 2010 and file an investigational new drug (IND) application in 2011.

With regard to money, Regulus will receive upfront and early-stage milestone payments with the potential to earn more than $150 million in miR-122-related combined payments. The royalty on worldwide is in the double digit. This is not the whole story of value for Regulus, hence, for Isis and alnylam. In addition to the HCV drug, Regulus is advancing into the clinic microRNA therapeutics for cardiovascular disease, fibrosis, oncology, immuno-inflammatory diseases, and metabolic diseases. Of great value is Regulus’ intellectual property estate, which contains over 600 patents and more than 300 pending patent applications pertaining primarily to chemical modifications of oligonucleotides targeting microRNAs for therapeutic applications.

Talking about gene-editing and RNA-related therapeutic, one cannot ignore the fact that Isis is the only drug developer that has crossed the finish line with local antisense molecules and will soon cross it again with breakthrough systemic molecules.

Good news cannot be translated into bad news that lead investors to instigate a sell-off of ISIP. All that we are hearing about this firm is good news, from the excellent trial results of Mipomersen for familial hypercholesterolemia to the other pipeline products and to the establishment of the valuable company Rugulus. We sincerely believe that Isis’ current stock price is an invitation for investors to own the stock of a great firm at a ridiculous price.

Disclosure: No Positions

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