4-Star Stocks Poised to Pop: Isis Pharmaceuticals

Based on the aggregated intelligence of 170,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, RNA drug developer Isis Pharmaceuticals (Nasdaq: ISIS) earned a respected four-star ranking.

With that in mind, let's take a closer look at Isis' business and see what CAPS investors are saying about the stock right now.

Isis facts

Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.

On CAPS, 96% of the 635 members who have rated Isis believe the stock will outperform the S&P 500 going forward. These bulls include TheStreetOutside and All-Star zzlangerhans, who is ranked in the top 0.5% of our community.

Two months ago, TheStreetOutside helped Fools sense the potential of Isis' RNA-based antisense drugs: "Rocky short term but believe the technology has a significant shot at success -- growing IP portfolio and multiple partnerships."

The application of antisense to a variety of areas continues to draw our community toward Isis. Despite severe liver enzyme-elevating side effects, Isis' most advanced drug mipomersen, which it is developing with Genzyme (Nasdaq: GENZ), has been shown to significantly reduce cholesterol levels. Additionally, Isis has been collaborating with Bristol-Myers (NYSE: BMY) since 2007 in developing drugs that target cardiovascular disease. And more recently, Isis entered into a new partnership with GlaxoSmithKline (NYSE: GSK) that will apply antisense technology to find treatments for rare and serious diseases, like those that cause blindness.

With the stock down 50% over the past year, severely lagging behind rivals AVI Biopharma and Enzo Biochem, CAPS All-Star zzlangerhans thinks Isis is too beaten-down to ignore:

The bear perspective on Isis currently has the upper hand. Four phase III trials of mipomersen for hypercholesterolemia have been completed and the story remains consistent -- the drug is effective at lowering cholesterol but confers a high risk of developing elevated liver enzymes, a potential precursor of irreversible liver injury. Pipeline candidates have been discontinued for less. And Big Daddy Genzyme has been the subject of takeover rumors, raising concerns that mipomersen may end up being returned to Isis on a Tupperware platter. ...

Isis appears to be the corporate leader in anti-sense technology, despite mipomersen's failings, and has other anti-sense drug candidates to treat diabetes advancing in their pipeline. Besides the potential of these new drugs, the technology platform and strong financial position will keep Isis on the short list of companies that may be acquired once the pendulum swings back in the direction of growth.

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