ISIS; Positive comments from Changewave investing newsletter

ISIS: Positive comments from Tobin Smith on his latest weekly update of Changewave Investing Newsletter.

Tobin Smith (a regular guest on bulls and bears on Fox) had the following comments on ISIS, following ALNY's deal with Roche. His target for ISIS remains at $20, which happens to be also Lehman's. I expect biotechs to outshine again towards ASH in early winter. If the atmosphere is right, I believe ISIS can trade above $20.

ISIS PHARMACEUTICALS (ISIS)

Isis Pharmaceuticals announced that it will receive $26.5 million from Alnylam Pharmaceuticals (ALNY) as its portion of the upfront fees and equity premium in the recently announced transaction between Roche Holding AG and Alnylam. In addition, Isis has the potential to receive milestone and royalty payments. This transaction underscores the value of Isis' innovation and the leadership role Isis has played in the field of nucleic-acid-based therapeutics. The close of the agreement is subject to certain regulatory approvals and is expected to occur within approximately 30 days.

OUR TAKE: The Alnylam deal with Roche has three major takeaways:

1) This agreement further validates the potential of RNA-based therapeutics becoming a major class of drugs and the excitement that large pharma has for the platform;
2) ISIS is well-positioned with its 2004 deal with ALNY to reap benefits from RNAi through substantial royalty payments from ALNY;
3) The Roche-Alnylam deal increases the probability that ISIS will be able to partner their broader drug ISIS301012 on extremely attractive terms.

Again, if big pharma wants to get a leg up on the major new emerging therapeutic world, my best guess is that Roche takes out ISIS for $20 per share.


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)

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