Zacks_Analysts' Blog : Isis-Biogen Team Up - Analyst Blog

Biogen Idec (BIIB) recently joined hands with Isis Pharmaceuticals, Inc. (ISIS) for the development and commercialization of an antisense drug for the treatment of spinal muscular atrophy (SMA).

The Candidate

The exclusive, global option and collaboration agreement relates to the development of ISIS-SMNRx, which is currently in a phase I study. The study, initiated in Dec 2011, is being conducted in children with SMA, a genetic neuromuscular disease characterized by muscle atrophy and weakness. It is estimated that one child out of every 10,000 births is born with SMA across the world. The life span could be significantly shortened in the most severe form of the disease.

ISIS-SMNRx enjoys orphan drug as well as fast track status with the US Food and Drug Administration (FDA). The currently ongoing single-dose, dose-escalation study is evaluating the safety, tolerability and pharmacokinetic profile of the drug in children (aged 2 - 14 years) who are medically stable. Isis Pharma has plans to conduct a phase I multiple-ascending dose study as well.

Terms of the Deal

Biogen has the option to license ISIS-SMNRx until completion of the first successful phase II/III trial. Isis Pharma, besides receiving an upfront payment of $29 million, could receive up to $45 million on the achievement of development milestones prior to licensing.

Biogen could end up paying up to another $225 million in the form of license fees and regulatory milestone payments. Moreover, Isis Pharma will be entitled to receive double-digit royalties on sales of ISIS-SMNRx.

While Isis Pharma will be responsible for the global development of ISIS-SMNRx through the completion of phase II/III registrational studies, with input from Biogen, the latter will take over global development, regulatory and commercialization responsibilities if it decides to exercise its option.

Our Take

This deal is a major positive for Isis Pharma. It not only validates the company’s antisense technology, it also provides the company with funds in the form of upfront, milestone and other payments. Biogen is a suitable partner for Isis Pharma given its expertise in the field of neurology. We currently have a Neutral recommendation on Isis Pharma, which carries a Zacks #3 Rank (short-term “Hold” rating).