Biotech Values

[acgood]

I have always thought ISIS was an interesting little company given the breadth of their pipeline, technology, and partnerships.

Agree...except maybe on the "little" part, as until relatively recent they had a >$1b market cap.

But, I assume you would have to have confidence in their lead drug, mipomersen, getting approved to take a position here. The approval decision on that drug is presumably a pretty key binary event for them, notwithstanding the fact that they do have a deep pipeline behind it.

I think the approval event for mipomersen will be viewed as being more important than it is in my opinion. But an important validation.

So, do you have confidence that mipomersen will be approved at least in the higher unmet medical need patient population? And, if so, is that likely to be a big value driver for them going forward?

Yes, and no. Mipomersen is a slam dunk for approval in the most severe initial indication. The next (severe HeFH) indication will be approved concurrently in EU but they are running another trial for that population in the US. Still, the approvals that should come by the end of 2012 (maybe early 2013 in US) are enough to support a couple hundred million in sales without being too aggressive on number of patients or pricing. That is hardly transformational to ISIS financially.

ISIS also had $365M in cash as of the end of 3Q11, which is pretty impressive, though it looks like they also have over $200M in notes due/LT liabilities as well.

This is a lot of cash, yes. But they will spend a fortune to move even a fraction of their phase 1 drugs through phase 2 programs. I don't see how the cash + first few years of mipomersen royalties is enough to get them to the approval of another drug (2015 at the absolute earliest) without aggressive partnering of additional assets.