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November 29, 2011
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We recently downgraded Isis Pharmaceuticals (ISIS) to Neutral from an Outperform recommendation. Isis Pharma is a drug discovery and development company that focuses on the development of products using ribonucleic acid (RNA)-based technologies, such as antisense. The company discovers new drugs and out-licenses them to partners for license fees, milestone payments, and royalties.
Isis Pharma’s lead pipeline candidate, Kynamro (mipomersen), is being developed for the treatment of familial hypercholesterolemia (FH). Isis Pharma has a collaboration agreement with Genzyme, a subsidiary of Sanofi-Aventis (SNY) for Kynamro.
While the companies filed for EU approval of Kynamro in July, the US filing is scheduled to take place later this month. Acceptance of the US filing will trigger a $25 million milestone payment from Sanofi, most likely in early 2012. Isis Pharma and Sanofi are expecting to launch Kynamro in 2012.
We are also positive on Isis Pharma’s deal with GlaxoSmithKline (GSK), under which the company’s antisense drug discovery platform is being used for the development of new treatments for rare and serious diseases, including infectious and ocular diseases. In addition to receiving an upfront payment of $35 million, Isis Pharma also stands to receive milestone payments under the agreement.
We believe these positive developments are already reflected in the current stock price and have, therefore, moved back to a Neutral recommendation
Moreover, we are concerned about Isis Pharma’s dependence on Kynamro for future growth. With all eyes focused on the successful development and commercialization of this candidate, any development or regulatory hurdle would be a major setback for the company.
A delay in gaining approval would weigh heavily on the stock. In fact, although Isis Pharma has consistently presented encouraging results on Kynamro, concerns regarding the candidate’s safety profile remain with the company reporting elevations in liver transaminases, which is a sign of possible liver damage. We remain worried that concerns regarding the safety profile of the drug could limit its commercial potential once it is launched.
Read the full analyst report on "ISIS"
Read the full analyst report on "SNY"
Read the full analyst report on "GSK"
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