Isis Shares Leap on Genzyme Cholesterol Deal
Genzyme said late on Monday it will license a promising new type of cholesterol drug from Isis Pharmaceuticals and could eventually pay Isis more than $1.5 billion in milestone payments and half the profit from its sales, lifting Isis shares 50 percent in after-hours trading.
The deal for mipomersen, now in late-stage trials, is a validation of Isis' long quest to perfect a technology called antisense and employ it in potential blockbuster medicines.
Genzyme , which is best known for its so-called orphan drugs to treat rare genetic diseases, said mipomersen would fit the company's specialty focus.
The deal for the product, which Genzyme first hopes to introduce for patients with a genetic tendency toward high cholesterol, would entitle Isis to an initial 30 percent share of profits. Its profit share would rise to 50 percent once global annual sales reach $2 billion or more.
"We believe it could prove to be the most effective lipid-lowering agent for high risk patients for whom conventional therapies are not sufficient," Henri Termeer, Genzyme's chief executive officer, said in a release.
Isis Chief Executive Stanley Crooke said on Nov. 14 at the Reuters Health Summit that the medicine was one of the most important drugs in biotechnology and its value could surpass Isis' market capitalization.
Under the deal announced on Monday, Genzyme said it will pay Isis $150 million, or $30 per share, to buy five million shares of its common stock. That is more than twice the $14.58 closing share price of Isis shares on Monday. Genzyme said it will also pay Isis a $175 million upfront fee to license its drug.
"In addition to the up-front payment, Isis also has the opportunity to receive from Genzyme up to $825 million in development and regulatory milestone payments plus up to $750 million in commercial milestone payments," the companies said.
Isis announced last year that it was launching an auction to find a partner for mipomersen, the most important of its experimental drugs that use antisense. The technology shuts down production of proteins linked to diseases by interfering with messenger RNA -- molecules that provide essential information to genes.
In mid-stage studies, the drug was well tolerated and reduced cholesterol and other artery-clogging blood fats more than 40 percent beyond reductions achieved with current treatments.
Crooke in November forecast peak annual U.S. sales of the drug, only in high-risk patients, could surpass $2 billion. He said it would be used as a supplement to the popular current "statin" family of cholesterol drugs, which include Pfizer's Lipitor and generically available simvastatin.
He said the value of mipomersen has gone up as other experimental cholesterol drugs have failed or faced setbacks in the past year, including the surprise failure in late 2006 of Pfizer's torcetrapib to raise good cholesterol.
Isis was at $21.90 in electronic trading.