Here's Why Isis Pharmaceuticals' Stock Shed 19% of its Value in September

Isis Pharmaceuticals followed the broader biotech sector lower in September. Should investors take advantage of this pullback or stay on the sidelines?

George Budwell
George Budwell
Oct 5, 2015 at 10:37AM
Health Care

ISIS Chart

What: Shares of the antisense drugmaker Isis Pharmaceuticals (NASDAQ:IONS) lost over 19% of their value in September. The good news is that this hefty downward move wasn't caused by a negative catalyst emanating from the company, but rather appears to reflect the market's unfavorable view of all biotechs of late:

IBB Chart

So what: Isis appears to have been particularly affected by the widespread biotech downturn because the company is still cash flow negative, despite having an approved product on the market via the hypercholesterolemia drug Kynamro and several lucrative partnerships with various big pharmas and biotechs.

In fact, the Street expects Isis to post a net loss of $0.52 per share for 2015, and this loss is projected to more than double in 2016 to $1.06 per share according to S&P Capital IQ. This marked rise in the drugmaker's projected net loss for 2016 is presumably the result of its maturing clinical pipeline that should see several additional experimental candidates move into costly late-stage trials next year.  

Now what: While Isis' bottom-line is no doubt moving in the wrong direction, it doesn't indicate that anything is fundamentally wrong with the company. In fact, it's quite the opposite. Isis sports perhaps the largest clinical program for a biotech of its size, with 38 drugs in development and five in late-stage trials.

Of course, Kynamro's commercialization hasn't been nearly as impressive as many previously hoped, but investors should bear in mind that this drug represents some of the company's earliest research efforts in the field of antisense technology. Put simply, Isis' next generation of antisense drugs are designed to be both more effective and safer for their respective indications, according to the company. 

Given that Isis has a rapidly maturing clinical pipeline across a diverse set of diseases -- many of which have blockbuster potential -- I think this recent pullback may indeed represent a good opportunity for risk-tolerant investors to consider taking a position in this emerging leader in the field of antisense drug development.