ISIS Eyes Obesity and Diabetes

07/23/2014 8:00 am EST

Focus: STOCKS

John McCamant

Editor, Medical Technology Stock Letter

Biotech stocks staged an impressive comeback to end the second quarter; here’s a look at one of our recommended biotechs, which continues to do what they do best—develop drugs for hard-to-drug or undruggable targets, observes John McCamant, editor of The Medical Technology Stock Letter.

ISIS Pharmaceuticals (ISIS) recently presented at the American Diabetes Association (ADA) the final results from its Phase II trial testing ISIS-GCGR in patients with type-2 diabetes uncontrolled on stable metformin therapy.

The data showed a strong reduction in hemoglobinA1c (HbA1c) levels accompanied by a benign side effect profile.

For the past few decades, we've been hearing about the rising level of obesity in the US that is leading to more and more cases of diabetes. A look at the recent numbers is pretty startling.

According to the ADA, one out of every ten Americans is diabetic, and one in four Americans is classified as pre-diabetic. For seniors, the figures are more daunting: 25% of America's elderly residents have diabetes.

According to the ADA, treating people with diabetes consumes one-fifth of all of our nation's healthcare expenditures.

 In our view, ISIS is well positioned to provide a therapeutic benefit for this huge health problem with both their GCGR and APOC 3 drug candidates, which specifically target the underlying causes of obesity/diabetes.

In two different studies, one gene, APOC3, stood out in its unique ability to reduce heart attacks by keeping triglyceride levels low. The ability to reduce heart attacks long-term would lead to a huge market opportunity which is not fully priced into ISIS’ valuation.

The data for GCGR presented at ADA demonstrates that it could be a best-in-class drug for patients with advanced type-2 diabetes.

Both the GCGR and APOC 3 drug candidates are ripe for partnering as either could be partnered out for preventing long-term cardio disease while keeping the rights to the smaller markets that can be developed faster. ISIS is a buy under $55 with a target price of $70.

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