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Milestone Payment for Isis Pharma

Zacks Equity Research

Isis Pharmaceuticals, Inc. (ISIS) earned another milestone payment with partner GlaxoSmithKline (GSK) adding a development candidate, ISIS-GSK3Rx, under its collaboration with Isis Pharma.

Isis Pharma earned a milestone payment of $7 million related to the advancement of ISIS-GSK3Rx, which is being developed using antisense technology to inhibit the production of an undisclosed target to treat a common viral infection.  While Isis Pharma is responsible for the development of ISIS-GSK3Rx to the phase II proof-of-concept stage, Glaxo has an exclusive option to in-license the program thereafter and develop and commercialize the candidate.

We are positive on Isis Pharma’s agreement with Glaxo and other companies including Biogen (BIIB), which not only validate the company’s antisense technology but also provide Isis Pharma with funds in the form of upfront, milestone and other payments.

Under the Glaxo deal, which is focused on the discovery and development of new therapeutics against targets for rare and/or serious diseases, Isis Pharma stands to receive additional pre-licensing milestone payments with the advancement of ISIS-GSK3Rx. Moreover, Isis Pharma may receive double-digit royalties on sales of ISIS-GSK3Rx.

Isis Pharma currently carries a Zacks Rank #3 (Hold). We view Kynamro’s Jan 2013 approval in the U.S. as a major milestone for the company. We are also pleased with Isis Pharma’s progress with its pipeline. However, we remain concerned about Kynamro’s sales ramp up which could be slow due to the reimbursement process and the process of finding eligible patients.

At present, Actelion (ALIOF) looks well-positioned with a Zacks Rank #1 (Strong Buy).

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