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Isis: Big Pharma's Little Friend

By Brandy Betz - Apr 8, 2013 at 3:25PM

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This Huntington's disease partnership could revolutionize treatments -- or fail out in trials. What does this new deal mean for Isis?

Roche (RHHBY 0.99%) and Isis Pharmaceuticals (IONS 1.93%) announcedMonday a new partnership for developing treatments for Huntington's disease, an incurable neurological deterioration. The duo aims to improve drug penetration to target the proteins responsible for this fatal genetic disease.

Big pharma Roche has enough products and pipeline contenders that lessen the chance of one drug making waves. But Isis' one approved drug has faced European rejection and will launch concurrently with a safer competitor.

Milestone payments from big pharma partners have carried Isis to Kynamro's launch, and provided a way for the company to minimize its risk. Will the Roche deal continue this trend?

Big pharma partners
The Food and Drug Administration approved Isis' lead drug candidate Kynamro in late January -- a month after Aegerion's competing drug Juxtapid.  Both drugs will launch this year, vying for a small patient population. And Juxtapid's better safety profile could crown it the winner.

Either way, Isis needs to keep moving to bring something else to market. Isis' pipelineboasts more than 20 projects and many feature big pharma partners including GlaxoSmithKline, Sanofi (SNY 1.28%), and AstraZeneca. That removes some of the risk from Isis' shoulders.

But big pharma partnerships can become bittersweet for smaller companies that mostly exist in the development stage. Kynamro's road to commercialization eased up with the backing of Sanofi, but it comes at the price of a profit share. Sanofi will market Kynamro in the U.S., which became the drug's primary market thanks to the European rejection. Isis receives an initial 30% profit share that increases to 50% if the drug hits $2 billion in annual sales.

The other partnerships vary widely in how much Isis could benefit. But a large percentage of pipeline projects fail to make it through the approval process. That's why the Roche deal could offer a further chance for Isis to spread its risk.

Huntington's deal
Huntington's disease causes uncontrolled movements and cognitive losses. The disease leads to death within 15 to 20 years of onset. There's no cure for the disease or a way to slow down the progression. Available treatments, such as Valeant's Xenazine, simply help patients manage the symptoms.

Isis and Roche have teamed up to combine Isis' antisense oligonucleotide, or ASO, technology with Roche's "brain shuttle"  molecules developed to better penetrate the brain. Basically, the companies want to improve the ability of a drug to get into the brain and block the proteins causing Huntington's.

But there's a long road ahead before we begin to see if and how these drugs will work. What does the deal mean for Isis' near, predictable future?

Roche paid $30 million upfront and could pay out up to $362 million in licenses and milestones. The company also has the option to license the developed drugs from Isis, but that move has to come before the end of phase 1 trials.

Foolish final thoughts
Enormous revenue potential would exist if the Isis-Roche-developed drugs could even slow the progression of Huntington's and gain FDA approval. But don't get too optimistic. Wait until the mid-stage and late-stage trials show some promising data -- if that day comes. For now, the Roche deal allows Isis to continue developing drugs and share the risk with big pharma partners at the same time.

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Stocks Mentioned

Roche Holding AG Stock Quote
Roche Holding AG
$40.74 (0.99%) $0.40
Ionis Pharmaceuticals, Inc. Stock Quote
Ionis Pharmaceuticals, Inc.
$39.13 (1.93%) $0.74
Sanofi Stock Quote
$53.06 (1.28%) $0.67
Bausch Health Companies Inc. Stock Quote
Bausch Health Companies Inc.
$10.15 (2.01%) $0.20

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