Milestone Payments Validate Isis Biotech Platform

06/10/2014 4:45 pm EST


Jim Jubak

Founder and Editor,

The huge move higher today in the shares of this pharmaceutical company, coupled with the milestone payments from the biotech's bigger partners, validate the company's antisense technology platform, writes MoneyShow's Jim Jubak.

Today's big move higher in shares of Isis Pharmaceuticals (ISIS) comes on a second day of good news on milestone payments from the company's bigger partners. As of 2:45 PM New York time today, Isis is up 7.2%. That brings the gain on this biotech to 33.6% since I added it to my Jubak's Picks portfolio on May 22 at $24.95.

Today's milestone news comes from the company's partnership with AstraZeneca (AZN). Isis has earned a $15 million milestone for beginning a Phase 1 study of ISIS-ARRx in patients with cancer. The drug uses an antisense approach to fight prostate cancer by inhibiting the production of the androgen receptor. The open-label, dose-escalation Phase 1 study will evaluate the safety and efficacy of ISIS-ARRx in patients with advanced solid tumors, such as in prostate, breast, bladder, and ovarian cancers.

Today's milestone announcement follows hard on the heels of yesterday's milestone news from Biogen Idec (BIIB). In that partnership, Isis earned a $14 million milestone payment for initiating a Phase 1 study of ISIS-DMPKRx to treat Type 1 myotonic dystrophy. The antisense drug candidate is designed to reduce the production of toxic dystrophia myotonica-protein kinase RNA. According to the terms of their June 2012 deal, Isis is responsible for the development of ISIS-DMPKRx through the completion of the first Phase II study and could collect up to $259 million in milestone payments from Biogen.

Isis has also partnered with Biogen on ISIS-SMNRx, a drug candidate for the treatment of spinal muscular atrophy in infants and children, with Phase 3 studies scheduled to begin later in 2014. The company's agreement also includes work on antisense drugs for neurological disorders and diseases.

As is usually the case in the biotech sector, milestone payments are more important as markers of continued progress on a promising drug candidate than for the money they bring in at any single stage. In the case of Isis, the milestones are especially important because they validate the company's antisense technology platform as a whole. If the technology works for these specific drug candidates, then Isis's platform gives the company a big and wide-ranging pipeline of potential new drugs.

As of June 10, I'm maintaining my $55 target price on Isis.

Full disclosure: I don't own shares of any of the companies mentioned in this post in my personal portfolio. When in 2010 I started the mutual fund I managed, Jubak Global Equity Fund, I liquidated all my individual stock holdings and put the money into the fund. The fund shut its doors at the end of May and my personal portfolio is now in cash. I anticipate putting those funds to work in the market over the next few months and when I do I'll disclose my positions here.

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