Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Following the release yesterday of midstage trial data for ISIS-PTP1B Rx for the treatment of type 2 diabetes, shares in Isis Pharmaceuticals (NASDAQ:IONS) dropped as much as 10% for a second consecutive day earlier Wednesday.
So what: The top-line results from the study appear solid -- at first glance. Isis noted that hemoglobin levels and body weight were significantly better in patients who received the drug during the trial than in those who received the placebo.
According to Isis, patients taking its drug had a mean 0.7% hemoglobin reduction, versus just a 0.2% drop in patients taking a placebo. That could suggest Isis' drug can help delay the need for patients to begin taking insulin to treat their disease, which in turn could push back the onset of life-threatening diabetes-related complications.
However, digging a bit deeper into the report shows that these promising findings were based on data collected after 36 weeks, rather than the 27 weeks previously planned. At best, that discrepancy casts a shadow over the otherwise solid results; at worst, it potentially dents Isis' reputation.
Now what: Isis' antisense drug research includes the study of nearly three dozen compounds across a variety of diseases; however, Isis has ushered just one drug through clinical trials to FDA approval. That drug, Kynamro, was approved to treat a rare cholesterol disorder, and sales have been tepid. Regardless, the potential to develop increasingly targeted and more effective medicine has attracted some of the planet's biggest drugmakers to team up with Isis on a variety of research programs. However, none of these big players has yet signed on to co-develop this diabetes drug. Whether that will change following the release of this data is anyone's guess, but the company's sliding stock value suggests short-term investors are not willing to wait and see. Long-haul investors who can withstand the risk of investing in highly volatile biotech stocks, however, might find Isis' deep product pipeline means the company's shares are worth buying at this lower price.