Isis Pharmaceuticals (NASDAQ:IONS) has a stable of candidates that companies several times its size would envy. With 32 candidates in development and five likely to be under regulatory review -- or approved -- within the next several years, it might have one of the most efficient discovery engines in the industry.

Now for the bad news, Isis has just one second-generation antisense drug on the market, and so far its launch has been disappointing. While the poor initial reception to Kynamro is upsetting, its performance might be the least of the company's worries. Let's see what is really keeping the RNA antisense pioneer awake at night.

Sinking flagship
Once touted as a potential Lipitor successor by CEO Stanley Crooke, Isis' flagship program, Kynamro, was almost bound to disappoint. While there's little doubt concerning its ability to decrease low density lipoprotein (LDL) cholesterol, serious adverse events prompted the FDA to limit its approval to patients with the extremely rare genetic condition, homozygous familial hypercholesterolemia, or HoFH. The FDA also insisted partners Isis and Sanofi run extensive long-term postmarketing studies to evaluate its long-term safety effects. Across the pond, the EMA refused to recommend its marketing authorization for any population ... twice.

Safety issues aside, Kynamro ran into competition at its outset. In the U.S., Juxtapid from Aegerion Pharmaceuticals won approval for HoFH just a month earlier than Kynamro where it has outperformed. Aegerion booked $48.5 million in Juxtapid sales last year and reached $27 million in the first quarter of 2014. Kynamro's first year sales were dismal enough that neither partner bothered to announce them, although the $3.1 million from licensing activities and royalties that Isis recorded last year suggest they were less than encouraging.

Further pressure for a limited Kynamro market could also be on the way from a new class of LDL cholesterol lowering therapies. Amgen's PCSK9 inhibitor evolocumab recently showed it could decrease LDL cholesterol in HoFH patients by 23% after 12 weeks. Kynamro partner Sanofi is also developing a PCSK9 inhibitor along with Regeneron. While the pair hasn't published HoFH data yet, evolocumab's success could be characteristic of the entire class.

Anti-drug antibodies
Potential cannibalization issues from marketing partner Sanofi might be worth fretting over, but Isis is facing a far more pressing issue. Long-term studies of Kynamro have unveiled serious tolerability issues that could be present across the company's entire pipeline.

Pooled phase 3 trial results showed 37.5% of patients developed antibodies specific to Kynamro. In other words, whenever these patients inject the drug, their immune systems recognize it and to differing degrees attack it. In those phase 3 trials the percentage of patients reporting flu-like symptoms was higher for patients with anti-Kynamro antibodies as for those without, about 25% and 39%, respectively.

Pooled phase 3 data is concerning, but the figures that should have Isis investors shivering come from a longer open-label extension study highlighted at an FDA advisory committee meeting. The data suggests the prevalence of anti-Kynamro antibodies rises as patients remain on therapy. A whopping 72% of patients in the extension study were positive for anti-Kynamro antibodies. Among anti-Kynamro antibody positive patients, over 71% exhibited flu-like symptoms.

Final thoughts
While Kynamro clearly has a host of issues, the main value driver for Isis is its bountiful clinical stage pipeline potentially worth nearly $9 billion per the 10-Q. A healthy stream of milestone revenue could be just waiting for the company's partners to invest moderate sums into clinical development of partnered programs.

Unfortunately that revenue potential won't be worth much if those partners can expect the same long-term tolerability issues present in Kynamro. Now, we don't know right now whether the problems are specific to Kynamro. But if they aren't -- if the antibody formation is a problem generalizable to all drugs in the pipeline -- then Isis could indeed have some additional difficulty.