Biotech Milestones preview (4): ISIS

Throughout 2006, biotech sector has struggled. As money prefer to stay with the commodity and energy, and somewhat in the financial area, the biotech companies' shares have been in a trading range at best. In addition, Democrats' win to secure majority position in the Congress seats stirred investor concern that reformed Medicare program will reduce earning of the large biotech companies. In addition, more stringent FDA standard to approve new drugs reduced the number of drugs approved in 06 compared to 05, deflating the biotech sector sentiment.

I expect in 07, the money that is rotating out of the oil and commodity will find its way into the biotech sector. With large pharma facing their pipeline drying up and their existing drugs facing more generic competitions due to patent expiration, M&A boom may occur in the sector. Large biotech companies are already doing some major acquisition as DNA and AMGN recently have purchased several small biotech companies. Big pharmas are likely to be even more aggressive this year. Given the expected market volatility, I expect investors may prefer large cap biotech names in the first half; however, in the second half, euphoria could spill over to the smaller names. As a leader in the RNA antisense technology, ISIS could be highly coveted by large biotech and pharma companies.

ISIS

Description.
Cancer - antisense (RNA based). Vitravene (fomivirsen) for CMV retinitis in people with AIDS is the first antisense drug to achieve marketing clearance - licensed to Novartis Ophthalmics. Alicaforsen (ISIS 2302), an inhibitor of intercellular adhesion molecule-1, has successfully completed phase II for ulcerative colitis and now seeking to partner; was discontinued for Crohn's disease after disappointing phase III results. Other lead proprietary candidates in clinical development include second-generation antisense products ISIS 113715 (inhibits PTB-1B) in phase II for type 2 diabetes and ISIS 301012 (targets apoB-100 mRNA) in phase II for high cholesterol. Phase II data presented at AHA demonstrated that ISIS 301012 reduced all atherogenic lipids as a single agent and when coadminiatered with statins. OGX-011 (ISIS 112989, inhibitor of Clusterin) is being developed by partner OncoGenex in phase II for prostate, lung, and breast cancers. Multiple additonal compounds in phase I and preclinical. Through Ibis division, developing TIGER biosensor system to identify infectious organisms.

Pipeline Milestones.
YE06/1Q07: Data from ISIS 301012 phase II trial in FH homozygous/heterozygous patients 1H07: FDA meeting to discuss registration path for ISIS 301012
1H07: Data from 400mg cohort in ISIS 301012 phase II trial
1H07: Data from 400mg 5-wk cohort and 200/300mg 12-wk cohort in phase IIa combination trial with statins

My Take.
Only biotech company to successfully market RNA technology into commercial product. Pipeline addresses diverse areas of medical needs that include diabetes, high blood pressure(cholesterol), and cancer. Highly speculative name but worth the speculation due to emerging exciting story in RNA technology. Even without the takeover speculation, the pipeline is worth considering. My price target is $18 with highly speculative buy rating.

The current stocks in that I cover are: Filthy Rich Tech ideas (comprised of Openwave, Avid Technology, Tivo, IBM, and Research in Motion), Filthy Rich Biotech ideas (comprised of Amgen, Celgene, Genzyme, Isis pharmaceuticals, Alnylam pharmaceutical, and Protein Design Lab), Filthy Rich Financial ideas (JP Morgan and Goldman Sachs), Filthy Rich China ideas (Focus Media Holding and Ctrip.com), Filthy Rich Transportation ideas ( American Airline and Southwest Airline), and Filthy Rich Specialty Retail ideas (Peet's coffee)

Please check out the archives for past posting on individual stocks. Also analysis is available at www.investorhives.com under FilthyRich hive. Thank you for visiting my blog.