Healthcare Business

Isis: A Cholesterol/Lipid Diety (ISIS, GENZ)

Isis Pharmaceuticals, Inc. (NASDAQ: ISIS) and Genzyme Corp. (NASDAQ: GENZ) have entered into a major strategic alliance in which Genzyme will develop and commercialize mipomersen. Mipomersen is Isis’ potential blockbuster lipid-lowering treatment for high risk cardiovascular patients that utilizes novel antisense technology.  Mipomersen is in Phase III studies.

As part of the strategic relationship, Genzyme will also have preferred access to future Isis drugs for CNS and certain rare diseases. This represents a major score for Isis.  Genzyme is taking a stake in the company and partnering with it.

Genzyme will pay Isis $150 million to purchase five million shares of Isis common stock for $30 per share.  Genzyme will also pay Isis a $175 million up-front license fee for mipomersen.  There’s still more.

In addition to the initial $325 million from the stake and the licensing fee, Isis has the potential to receive significant milestone payments for mipomersen and the two companies will share profits once that mipomersen has been launched.  Genzyme and Isis will share mipomersen profits 50/50 when annual worldwide revenues reach $2 billion or more. The profit share begins with a 70/30 Genzyme/Isis split and reaches 50/50 on a sliding scale as annual revenues ramp up to $2 billion.

Mipomersen has been shown in phase 2 trials to reduce cholesterol and other atherogenic lipids more than 40 percent beyond reductions achieved with current standard lipid-lowering drugs, enabling more patients to achieve lipid targets.  Hence the potential blockbuster status if this goes as well it seems. Mipomersen’s initial indication will be for patients with familial hypercholesterolemia (FH), with an anticipated filing in 2009.

As Isis had a $1.27 Billion market cap at the close, it mightr not be quite as large of a surprise for the gain.  Shares are up over 45% in after-hours trading to $21.27 and the 52-week trading range had been $8.30 to $18.23.

Jon C. Ogg
January 7, 2008

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