This Anti-Sense Bet Makes Sense

Mohsin is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

In the last couple of years, the biotechnology industry has been on a roll. The large number of drug approvals and the dreaded patent cliff has positively impacted the biotechnology index. This has increased demand for small biotechnology companies with promising candidates and improved across the entire industry.

Recently, Isis Pharmaceuticals (NASDAQ: ISIS) antisense platform has received a lot of attention. The company uses its antisense technology to eradicate proteins which are integral to the growth of harmful diseases. The approval of its primary candidate, KYNAMRO, has proven the enormous potential of company’s antisense platform. Therefore, despite a six-month 160% rally, it is still a safe biotechnology bet.


Isis Pharmaceuticals is a biotechnology company involved in discovering, developing and commercializing antisense drugs. The valuations of Isis are tied to its primary product candidate, KYNAMRO injection. The drug has recently received FDA approval. KYNAMRO is an apo-B synthesis inhibitor for patients with homozygous familial hypercholesterolemia. The drug has shown effectiveness in the reduction of the harmful LDL (low-density lipoprotein) cholesterol.

In the short run, the valuations of Isis are dependent on the commercial success and market perception of KYNAMRO. However, recent rallies have pretty much priced in the potential of KYNAMRO. The real long term potential of Isis is in its exceptionally strong pipeline and partnerships. The company has over 28 drugs in various stages of development for ailments such as cancer, cardiovascular, neurologic and metabolic diseases.


Small biopharmaceuticals companies are usually not in the business of commercializing drugs. These companies are content to get the FDA approval and then find the highest bidder. If the company is a single drug company, the entire company is an acquisition target. However, if the pipeline is substantial, the rights for the approved drug are sold to the highest bidder or a commercialization partnership is made with a big-pharmaceutical.

Isis has a number of partnership agreements with cash-rich healthcare companies. These research partnerships are a source of constant royalty payments, license fees and milestone payments. In case of a successful drug, these partners can buy out drug rights or at least become commercialization partners.

AstraZeneca (NYSE: AZN) is one of the company’s biggest strategic partners. These partners have an agreement to collaborate on discovery and development of five oncology treatments. They are already working on ISIS-STAT3 and ISIS-AR. ISIS-STAT3 is an antisense drug which inhibits the growth of STAT3 protein; this protein is integral to tumor cell growth. The compound is mid-way into Phase II clinical trials. ISIS-AR is currently in Phase I clinical trials and inhibits androgen receptors, for treating prostate cancer.

The patent cliff has badly affected AstraZeneca. A number of its key drugs are facing generic threats, and the company’s pipeline is not strong enough to make up for lost revenues. This has forced AstraZeneca to turn on an acquisitive growth strategy. The company is shopping for promising drug candidates which can be long term winners. In a recent strategic move the CEO, Pascal Soriot, has decided to focus on three key segments including cardiovascular and oncology. It has already made a significant acquisition in the cardiovascular segment, of Omthera Pharmaceuticals. Isis can be another oncology target for the cash-rich AstraZeneca.


The valuations of Isis have jumped in the last few months. The primary reason behind this jump has been the FDA approval of its candidate. This approval is not merely an approval of a single candidate but a stamp of approval of the entire platform.

Earlier this year, the company received FDA approval for its LDL lowering drug, KYNAMRO. FDA has approved the drug for the treatment of inherited Cholesterol disorder Homozygous Familial Hypercholesterolemia (HoFH). In clinical trials Isis’ heart treatment has cut down triglyceride levels by 72% and increased the HDL cholesterol (healthy) by 40%. According to sell-side estimates, the drug can have an annual sales potential of around $850 million. KYNAMRO will have to compete with Aegerion's (NASDAQ: AEGR) Juxtapid (lomitapide). The drug is expensive ($295,000) but has been supremely effective against HoFH. Aegerion valuations have shown significant resistance to the approval of KYNAMRO. Despite competition, the stock is up almost 160% in 2013.

While many would argue that the market for HoFH is too small, the approval actually proves the success of the antisense platform. The company has over 28 antisense drugs in the pipeline, most in partnership with key players like Roche, AstraZeneca, Pfizer, GSK etc.


The approval of KYNAMRO and positive Phase II data of ISIS-APOCIII is a testament to the mammoth potential of the Isis antisense platform. The approval of KYNAMRO has been priced in, but the company still has a lot of upside potential due to pipeline strength. The antisense platform has already proven itself, and the same technology can help against numerous other ailments. Despite a 160% rally in the last six months, the company is an excellent long term investment due to its pipeline strength and lucrative partnerships. 

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