Strong Isis Pharma Outlook

We are reiterating our Buy rating on Isis Pharmaceuticals Inc. (ISIS - Analyst Report). We believe that antisense technology represents an exciting and potentially revolutionary platform for developing therapeutic candidates to treat a wide variety of diseases. We see Isis as uniquely positioned for a very successful future.

The company’s lead candidates are mipomersen for high cholesterol and ISIS-113715 for diabetes, along with several other proprietary and partnered programs for oncology, inflammatory disease, asthma, and viral infections. We think that by 2011 two to three additional antisense drugs developed by Isis could be on the market. Our financial model forecasts profitability in 2011.

We find it comforting that Genzyme (GENZ - Analyst Report) recently agreed to acquire five million shares of Isis at $30 per share - $10 above our near-term target. We also encourage investors to pick up the shares at this level considering the drop in the stock price after what we believe was a significant over-reaction to the downside on the mipomersen news.

Thanks to collaborations, Isis has put itself in constant position to receive developmental milestone. The company sees no need to re-tap the financial markets in the next five years. The management expects to exit 2008 with over $450 million still on the books very conservative guidance in our view. If we couple the cash with the potential of mipomersen as a blockbuster and consider that several other compounds are moving nicely forward, Isis looks like the premier small-to-mid cap biotechnology company in our universe.

Read the full analyst report on ISIS