Shares of ISIS Finally Bottom Out? Print E-mail
By Brian Wilson, Lead Contributor   
Thursday, 25 October 2012 06:58
icon_newsnotesShares of Isis Pharmaceuticals (NASDAQ: ISIS) are finally bottoming out after last week's drop, which began on October 16th in reaction to documents that outlined the topics that would be discussed at the advisory committee meeting (on October 18th) regarding the NDA of Isis' flagship product. The market certainly didn't like the idea that FDA is worried that ISIS's cardiovascular drug KYNAMRO (mipomersen) could bring up concerns about its safety profile – especially since there's reason to believe that the drug may increase the risk of cancer in patients.

KYNAMRO is a first-in-class antisense drug that lowers cholesterol, which acts through a very unique mechanism that hasn't been targeted before within the cardiovascular drug space. According to company statements, KYNAMRO has met the primary, secondary, and tertiary endpoints in four clinical trials in the treatment of high cholesterol levels, and offers an alternative method for cardiologists to target the huge pool of high-cholesterol patients. The problem is that KYNAMRO has a few intrinsic flaws that may prevent it from being able to compete with the major drugs that have already taken over the cholesterol treatment space. The biggest cholesterol-lowering drugs are known as “statins”, which include the record-breaking and mega blockbuster Lipitor (atorvastatin) and Crestor (rosuvastatin).

KYNAMRO, unlike its statin competitors, doesn't come in pill form and actually requires injections. The drug is waiting on an NDA that was submitted back in May, which set a PDUFA action date of January 29, 2013. The advisory committee meeting that was held on October 18th came to a final vote of 9 to 6 in favor of approval, although it's important to note that this is actually a weak victory for Isis. Although the majority of the panel did in fact recommend the drug, and while headlines imply that the FDA is favoring approval for KYNAMRO, I would have a hard time trusting the narrow margin of victory.

There is a lot of reason for the FDA to send a complete response letter (CRL) instead of an acceptance letter to Isis on the PDUFA date in 2013. Perhaps the most important factor is the existence of a large number of highly effective and well-tolerated cholesterol treatments already in the market. Since the demand for cholesterol reducing medication has been met by a big selection of statins, and other classes of drugs, the FDA can essentially conclude that there really isn't an unmet demand for KYNAMRO's prospective users. The FDA can afford to be very cautious regarding KYNAMRO, which means that there will be a lot of emphasis on the drug's potential to induce tumor growth when it comes time to evaluate the NDA.

Also note that while the world marketing rights for KYNAMRO were already sold to Genzyme/Sanofi in 2008, Isis can still benefit significantly from milestone payments. Isis received a sum of $25 million just from its NDA submission, and is set to receive more on an FDA approval. ISIS shareholders are clearly looking for an FDA approval for KYNAMRO at this point.

The inherent risks brought about by KYNAMRO were already known to investors prior to October 16th, when the FDA brought up concerns again, but they weren't considered nearly as big of a threat until this point. We knew that KYNAMRO causes elevated levels of certain enzymes in patients' livers, but the severity of the risk is quite ambiguous due to some other factors brought up by the panel. This includes the scrutiny that was placed on the KYNAMRO arm in the latest phase III trials, specifically on patients' livers.

Still, the FDA generally leans towards the side of caution. If the FDA ends up being cautious with Isis/Genzyme's NDA submission for KYNAMRO, they will reject it ask Isis to perform additional safety studies on KYNAMRO that can specifically address the concerns brought up about liver toxicity and tumor development. So, don't be too shocked if we see a rejection on January 29th. If KYNAMRO actually does get approved, however, the market would be shocked and ISIS would likely see immediate 30% gains (and then some).

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