Isis Pharma Stays Neutral - Analyst Blog

By Zacks | July 11, 2012 AAA

We recently reiterated our Neutral recommendation on Isis Pharmaceuticals (ISIS), which carries a Zacks #3 Rank (short-term Hold rating). 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 (SNY) for Kynamro.

In late March 2012, Sanofi submitted a new drug application seeking US Food and Drug Administration (FDA) approval for the use of Kynamro for the treatment of patients with homozygous (Ho) FH (HoFH). A response from the FDA should be out by January 29, 2013. Approval would trigger a $25 million milestone payment from Sanofi.

Meanwhile, the EU filing for HoFH and severe heterozygous FH (heFH) was submitted in July 2011 - the companies are expecting to launch Kynamro later this year. Isis Pharma and Genzyme are conducting a 12-month study (FOCUS FH - saFety and atherOgeniC lipoprotein redUction of mipomerSen in FH).

This study is being conducted to support the expansion of the FH patient population to include severe heterozygous FH in the US, support an alternative dosing regimen (three times a week), and broaden the FH indication beyond severe in Europe. Successful development could allow Kynamro's label expansion in the 2015-2016 timeframe. 

We are also positive on Isis Pharma's agreements with GlaxoSmithKline (GSK) and Biogen Idec (BIIB), which not only validate its antisense technology but also provide Isis Pharma with funds in the form of upfront, milestone and other payments.

However, 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.

Moreover, Kynamro is targeting the highly competitive and crowded cardiovascular disease market. In addition to competing with existing therapies, the company will also face competition from companies that are pursuing the development of drugs based on oligonucleotide-based technology. Aegerion Pharmaceuticals (AEGR) is not far behind with the company having filed for US and EU approval of its candidate, lomitapide, in early March 2012 - a response in the US could be out in January 2013.

We expect investor focus to remain on the regulatory progress of Kynamro.

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