Isis Pharmaceutical: Antisense profits

We expect 2012 to be the year that investors both discover and learn to appreciate the broad potential of antisense technology in drug development. As such, we continue to recommend Isis Pharmaceuticals (ISIS).

The company finished 2011 with a pro forma net operating loss (NOL) of $61.3 million compared to a pro forma NOL of $36.2 million for 2010. At year-end, the firm had nearly $344 million in cash.

On a GAAP basis, Isis reported a loss from operations of $18.6 million and $71.1 million for the three and twelve months ended December 31, 2011, respectively, compared to $15.9 million and $48.4 million for the same periods in 2010.�� �

In 2012, Isis plans to achieve the following goals itself and with its partners:

• Together with Genzyme, advance Kynamro to the market for patients who cannot adequately control their cholesterol levels with current therapies. �
• File a new drug application for Kynamro marketing approval in the U.S. in the first quarter of 2012.
• Receive marketing approval for Kynamro and launch in the second half of 2012.
• Continue to enroll the FOCUS FH study to potentially expand the commercial opportunity for Kynamro.
• Report clinical data on seven drugs in its pipeline. �
• Initiate Phase II or Phase II/III clinical studies on five drugs and initiate Phase I clinical studies on two drugs in its
• pipeline.
• Broaden its pipeline by adding three to five new drugs.
• Continue to successfully execute its business strategy to generate revenue and cash.

Importantly, ISIS also reported that Genzyme has reached agreement with the FDA on a Special Protocol Assessment for the trial that is required for broadening the U.S. label. This trial will also support broadening the heterozygous FH indication in Europe. �
The company also reported that they are in the process of finalizing the detailed planning for their APOc-III program.� ISIS is considering a variety of options as they prepare to move into Phase II to ensure that they retain as much of the backend economics as possible. �

Their approach is similar to Kynamro since just as there are severe LDL problems there are severe triglyceride programs.� Severe hypertriglyceridemia is typically defined as greater than 500 mg/dL, some people think a 1000 mg/dL

High levels of triglycerides are associated with acute pancreatitis and consensus opinion is that the acute pancreatitis that happens in those patients is more severe than the acute pancreatitis that occurs in others.

Next these people get recurrent pancreatitis and they can't get their triglycerides down. So, there is a clear differentiation between severe and less severe high triglycerides and ISIS believes the fastest route to commercialization is one that focuses initially on the severe patient population.

And, just like Kynamro, there is also a genetic abnormality in which you have the mutation and the enzyme that is used to degrade triglycerides in blood, LPL, and there are homozygous LPL people and heterozygous LDL people just like there are homozygous and heterozygous FH patients. �

The company believes that the Phase II data may point to an accelerated filing strategy with the first data set expected by year-end. This could lead to a rapid move to the market in various parts of the world.

ISIS stock is finally gaining some momentum and we expect 2012 to be a very good year for the company as they enjoy the increased visibility among biotech investors in accordance with the Kynamro launch. ISIS is a buy under $12.




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