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In its briefing document, the US Food and Drug Administration (FDA) recently raised issues regarding the safety of Genzyme, a Sanofi (SNY - Analyst Report) company, and partner Isis Pharmaceuticals Inc.’s (ISIS - Analyst Report) candidate Kynamro (mipomersen).

The companies are seeking FDA approval for the use of Kynamro for the treatment of patients with homozygous familial hypercholesterolemia (HoFH). Kynamro will be reviewed by an FDA advisory panel on October 18, 2012. A response from the FDA is expected by January 29, 2013. Approval would trigger a $25 million milestone payment from Sanofi.

The FDA raised concerns regarding liver-related adverse effects associated with Kynamro in the briefing document. In the pooled phase III results, it was observed that a higher number of adverse events were related to elevations in serum transaminase levels and hepatic steatosis in the Kynamro arm as compared to placebo.

In the Kynamro arm, the incidence of reported benign and malignant neoplasms (3.1%) was also higher, when compared to placebo (0.9%). Additionally, the FDA noted that Kynamro increased the incidence of hemangiosarcomas and hepatocellular adenomas/carcinomas in animal studies.

Investors have reacted negatively with Isis Pharma’s share price plunging 21.9% on the news.

Kynamro is the lead pipeline candidate at Isis Pharma. Isis Pharma and Genzyme are also seeking approval for the candidate in the EU for HoFH and severe heterozygous familial hypercholesterolemia (HeFH) – the companies are expecting to launch Kynamro later this year pending EU approval.

Isis and Genzyme are conducting a 12-month study (FOCUS FH - saFety and atherOgeniC lipoprotein redUction of mipomerSen in FH). This study is being conducted to support the expansion of the FH patient population to include severe HeFH in the US, support an alternative dosing regimen (three times a week), and broaden the FH indication beyond severe in Europe. Successful development could allow Kynamro’s label expansion in the 2015-2016 timeframe.  

Isis Pharma’s agreement with Genzyme dates back to 2008. As per the terms of the deal, Isis will not only receive commercialization and development milestones, it will also split net profits with Sanofi on Kynamro (70% – Sanofi, 30% - Isis) until worldwide sales eclipse $2 billion. Thereafter, the companies will split profits on Kynamro 50/50.

Although we believe Kynamro has blockbuster potential, we remain worried that concerns regarding the safety profile of the drug could limit its commercial potential once launched.

We currently have a Neutral recommendation on Isis Pharma, which carries a Zacks #4 Rank (short-term Sell rating). We expect investor focus to remain on the outcome of the FDA panel meeting. We note that the FDA’s Endocrinologic and Metabolic Drugs Advisory Committee will be reviewing Aegerion Pharmaceuticals, Inc.'s (AEGR - Analyst Report) lomitapide on October 17 for the treatment of adult patients with HoFH.

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