Isis Pharma shares rise on Kynamro approval

Associated Press

NEW YORK (AP) -- Shares of Isis Pharmaceuticals Inc. soared Wednesday on news that the U.S. Food and Drug Administration approved its new drug application for its Kynamro cholesterol drug.

THE SPARK: The approval clears the way for Kynamro, the company's first drug, to reach market.

Carlsbad, Calif.-based Isis has a deal with Genzyme, a unit of French drugmaker Sanofi SA, to market the drug if it is approved. The FDA approval triggers a $25 million milestone payment to Isis from Genzyme.

THE BIG PICTURE: Kynamro is an injectable drug designed to treat patients who are genetically predisposed to have high levels of LDL cholesterol, known as the "bad" cholesterol. The drug has been approved for use as an adjunct to lipid-lowering medications and diet for patients with homozygous familial hypercholesterolemia.

HoFH is a rare inherited condition that makes the body unable to remove LDL cholesterol from the blood, causing abnormally high levels of circulating LDL cholesterol. In the United States, HoFH occurs in about one in one million individuals, according to the company.

THE ANALYSIS: BMO Capital markets analyst Dr. Jim Birchenough backed his "Outperform" rating for the stock, estimating the drug's peak sales at about $400 million. He added that the approval also bodes well for Isis' platform of more than 20 drug candidates.

Jefferies analyst Eun Yang backed an "Underperform" rating for Isis, but raised her price target by 50 cents to $7. Yang said that while the approval is a good thing for the company, she still thinks that the drug's commercial potential is low given the numerous side effects identified while it was being tested, including links to both benign and cancerous tumors. As a result, Yang said the drug's peak U.S. sales potential is probably less than $100 million.

THE SHARES: Up $1.51, or 11 percent, to $14.89 in afternoon trading, after peaking at $15.60 and coming within a penny of its 52-week high. Isis shares have risen steadily since November, gaining about 74 percent.