ISIS Chart

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What: Shares of Isis Pharmaceuticals (NASDAQ:IONS), a biopharmaceutical company focused on using its proprietary antisense technology platform to develop therapies across a wide range of disease implications, motored ahead by 12% in November, based on data from S&P Capital IQ, on the heels of three positive events.

So what: I suspect the most important upside driver for Isis in November was its $425 convertible debt offering announced on Nov. 10. Normally debt offerings aren't good news, but the offering is being undertaken to purchase $140 million worth of notes due in 2019, thus extending its debt obligations out another two years and possibly pushing any possibility of shareholder dilution out farther. Considering that Isis has but one drug approved by the Food and Drug Administration at the moment, it's a smart move. 

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Source: Isis Pharmaceuticals.

Secondly, Isis and AstraZeneca announced an expansion of their collaborative agreement to develop new delivery methods for antisense oligonucleotides. Without getting too technical, Isis relies heavily on its roughly one dozen collaborative partners to supply milestone revenue and development/marketing expertise, so having AstraZeneca in its corner is a good thing. 

Lastly, in late November Isis announced the initiation and dosing of the first patient with ISIS-SMNrx in its phase 3 CHERISH trial for 120 non-ambulatory children with spinal muscular atrophy. As part of hitting this milestone Biogen Idec, Isis' collaborative partner on ISIS-SMNrx, now owes Isis a $27 million payment. These milestone payments are a key ingredient that allows Isis to generate cash flow while running somewhere in the neighborhood of three dozen clinical studies.

Now what: I'm really not surprised to find Isis in the winner's column in spite of having only one FDA approved drug at the moment. Isis is by no means inexpensive at a valuation of $6.1 billion, but considering the incredible partnerships it possesses, the value of its proprietary antisense drug development technology, and its nearly three dozen ongoing studies, there are just so many opportunities for Isis to hit a home run.

Because the company is beginning to see more of its trials move into the late-stages of their development, it's quite possible its costs will rise in the coming years, which may negatively affect its bottom line and expand its losses. Those losses may temporarily place a cap on Isis' stock price over say the next one-to-three years. However, should even a handful of Isis' programs succeed it'll more than validate the value of Isis' antisense platform and could easily push Isis' share price even higher over the long run.

I remain quite optimistic on Isis Pharmaceuticals' future, but would suggest waiting for one of those earnings-induced pullbacks before diving right in.

Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

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