Disclosure: I am long AEGR.
Other smaller pharma companies developing RNA interference/RNAi and antisense drug applications include: Tekmira Pharmaceuticals (TKMR), Sarepta Therapeutics (SRPT), Alnylam (ALNY) and Bio-Path Holdings (OTC:BPTH). But Isis Pharmaceuticals was the first antisense player to date to receive regulatory approval back in 1998 for its antiviral drug Vitravene, and more recently, this January, Isis and Genzyme, a Sanofi company (SNY), received FDA approval for its drug Kynamro to treat inherited cholesterol disorder.
Kynamro, the first systemic antisense therapy to receive regulatory approval, was an important validation of Isis' deep antisense pipeline. Homozygous familial hypercholesterolemia (HoFH), the condition that Kynamro was approved to treat, is relatively rare, ocurring in 1 in a million births. Despite the limited patient population and competition from Aegerion's Juxtapid (AEGR), analysts still estimate Kynamro's peak market opportunity to be in the $200-400 million range. Part of the reason for the revenue opportunity - the high price. Sanofi's Genzyme unit has set a price for Kynamro of $176,000 year. This is actually cheaper than Juxtapid, which runs $235,000-$295,000 year, depending on the patient. The side-effect profiles are also different, perhaps favoring Juxtapid. But Kynamro has the marketing power of Sanofi/Genzyme behind it to help drive sales.
On its earnings call, the company predicted that 2013 was going to be a year of "substantial growth and maturation for Isis." Already in 2013, the company has received a $25 million milestone payment from Genzyme and a $7.5 million milestone payment from GlaxoSmithKline (GSK). With the commercial launch of Kynamro, a maturing pipeline of drugs, and more near-term opportunities for partnership revenue, 2013 is setting up to be a strong year of revenue growth for the company.
On February 28, the company reported a narrower than expected loss of $.03 per share, which was $.20 better than the Zack's consensus estimate. Revenues fell 38.6% year over year to $19.9 million, but this was also higher than the Zack's $16 million consensus estimate.
On April 8th, Isis Pharmaceuticals, Inc. announced that they have formed an alliance with Roche to develop treatments for Huntington's disease (an inherited brain disorder) based on Isis' antisense technology and Roche's "brain shuttle" technology developed to better penetrate the brain. Presently, there is no effective treatment or cure for the disease, and current treatments, such as Valeant's (VRX) drug Xenazine, only focus on reducing the severity of some disease symptoms.
About 30,000 Americans have Huntington's disease. A similar prevalance of 1/10,000 is believed to occur in the major countries in Europe. If all patients with the disease were prescribed a treatment, at a modest cost of $20,000 per patient, the total market opportunity could be as much as $4.2 billion across the patient population. Despite the challenges that lay ahead, the announced partnership with Roche is yet another validation of Isis' antisense drug delivery platform.
Isis Pharmaceutical does indeed have an impressive drug pipeline and some big strategic partners.
Pipeline
| Drug | Target | Partner | Phase |
| CARDIOVASCULAR | |||
| KYNAMRO™ | ApoB-100 | Genzyme | Phase III |
| ISIS-APOCIIIRx | ApoCIII | - | Phase II |
| ISIS-CRPRx | CRP | - | Phase II |
| ISIS-FXIRx | Factor XI | - | Phase II |
| ISIS-APOARx | Apo(a) | - | Phase I |
| ISIS-FVIIRx | Factor VII | - | Preclinical |
| SEVERE & RARE | |||
| KYNAMRO™ | ApoB-100 | Genzyme | Approved |
| Alicaforsen | ICAM-1 | Atlantic | Phase II/Named Patient Supply |
| ISIS-TTRRx | TTR | GSK | Phase III |
| ISIS-SMNRx | SMN2 | Biogen Idec | Phase II |
| ISIS-APOCIIIRx | ApoCIII | - | Phase II |
| ATL1103 | GHr | ATL | Phase II |
| ISIS-GCCRRx | GCCR | - | Phase I |
| ISIS-AATRx | AAT | GSK | Preclinical |
| ISIS-PKKRx | PKK | - | Preclinical |
| METABOLIC | |||
| ISIS-PTP1BRx | PTP-1B | - | Phase I |
| ISIS-GCCRRx | GCCR | - | Phase I |
| ISIS-GCGRRx | GCGR | - | Phase I |
| ISIS-FGFR4Rx | FGFR4 | - | Phase I |
| ISIS-DGAT2Rx | DGAT2 | - | Preclinical |
| CANCER | |||
| Custirsen | clusterin | Teva/OncoGenex | Phase III |
| ISIS-EIF4ERx | eIF-4E | - | Phase II |
| OGX-427 | Hsp27 | OncoGenex | Phase II |
| ISIS-STAT3Rx | STAT3 | AstraZeneca | Phase II |
| ISIS-AZ1Rx | Undisclosed | AstraZeneca | Preclinical |
| INFLAMMATION AND OTHER | |||
| ISIS-CRPRx | CRP | - | Phase II |
| ATL1102 | VLA-4 | ATL | Phase II |
| EXC 001 | CTGF | Pfizer | Phase II |
| iCo-007 | C-raf kinase | iCo | Phase II |
| Plazomicin | Aminoglycoside | Achaogen | Phase II |
| XEN701 | Undisclosed | Xenon | Preclinical |
| ISIS-GSK3Rx | Undisclosed | GSK | Preclinical |
Source: Isis Pharmaceuticals Company Website
Strategic Partnerships
Strategic partnerships are critical to Isis' future success. The company's partnership strategy has enabled it to build a broad product pipeline with its annuity of license fees, milestone payments and royalty payments. The other advantage of this strategy is that development expenses are limited and it allows the company to focus on research and development.Biogen-Idec
Isis formed three new strategic alliances with Biogen-Idec (BIIB) to develop and commercialize antisense drugs for severe and rare neurologic diseases. In total, the three alliances are valued at up to $1.2 billion.AstraZeneca
Isis formed a strategic alliance with AstraZeneca (AZN) to discover and develop antisense drugs against five cancer targets. The agreement comprises $31 million in upfront and near-term payments, including a $25 million payment Isis has received followed by a $6 million payment Isis is eligible to receive in the second quarter of 2013 assuming the research program is continuing. Isis is also eligible to receive milestone payments, license fees and royalties.GlaxoSmithLine
Isis and GlaxoSmithKline are pursuing an accelerated development plan for ISIS-TTRRx. As a result, Isis received a $2.5 million upfront payment and a $7.5 million milestone payment. Isis is also eligible to earn an additional $50 million in pre-licensing milestone payments.Roche
Isis and Roche (OTCQX:RHHBY) formed an alliance for Huntington's disease. Roche will make a $30 million upfront payment to Isis. Total payments related to license fee and pre- and post-licensing milestone payments are potentially $362 million, including up to $80 million in potential commercial milestone payments.Other Partnerships
Isis benefited as its partners advanced RNA-based technologies and products incorporating its technology.- Isis received $2.7 million from Alnylam as a result of Alnylam's licenses that included Isis' patents.
- Isis received $1.3 million from Pfizer triggered by Pfizer's decision to advance EXC 001 into a Phase 2 study.
Stock Price
So how has all this positive news flow translated to the stock's price year-to-date, and is there still near-term opportunity for upside?(click to enlarge)
The stock traded off late last year and dipped below $8 share on safety and competitive concerns related to Kynamro. But since the drug was approved in January, the stock has moved from $14 and moved up to test the $18 level. The stock is up more than 66% year-to-date versus only 17% for the AMEX Biotech Index (BTK). However, in the absence of earnings, if Isis' stock is going to move higher, it needs more strategic partnerships such as the one announced today. Isis Pharmaceuticals is a Jim Cramer, CNBC "Mad Money" mention and one of his favorite picks in the biotech space. Prior to today's announcement, Cramer stated on April 3's show that he would wait for a pullback before buying shares.
Despite the favorable terms of the recent Roche partnership, the announcement did not really move Isis Pharmaceutical stock - it traded up only 3 cents a share. However, with yet another lucrative strategic partnership deal inked for the company, on the heels of an important FDA approval, "antisense" may be starting to make sense as an investment opportunity.
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