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Another Milestone for Isis Pharma

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Isis Pharmaceuticals, Inc. will receive a $10 million milestone payment from Biogen Idec (BIIB - Free Report) under their Jun 2012 agreement.

Isis Pharma said that ISIS-DMPKRx has been selected for further development for the treatment of myotonic dystrophy type I (DM1). The company expects to move the candidate into human studies next year.

As per the terms of the exclusive, worldwide option and collaboration agreement, Biogen had made an upfront payment of $12 million to Isis Pharma. Besides this, Isis Pharma could receive up to $59 million on the achievement of development-based milestones. This includes the $10 million milestone payment that was recently achieved. Biogen has the option to in-license the candidate from Isis Pharma any time up to the completion of phase II development. If Biogen decides to exercise its option, it will be responsible for the worldwide development, approval and commercialization of the candidate.

Biogen could end up paying an additional $200 million as license fee and on the achievement of regulatory based milestones. Besides this, Biogen will pay double-digit royalties on sales of ISIS-DMPKRx once it is commercialized.

We note that Isis Pharma has four deals with Biogen. The companies first collaborated in early 2012 for the development of antisense drugs to treat spinal muscular atrophy. This was followed by the Jun 2012 deal for the development of antisense drugs to treat DM1. The third deal, also signed in 2012, was for the discovery and development of antisense drugs against three novel targets for neurological disorders. Finally, in Sep 2013, the companies teamed up again for the use of Isis Pharma's antisense technology for the development of treatments for neurological diseases.

Isis Pharma currently carries a Zacks Rank #1 (Strong Buy). We view Kynamro’s Jan 2013 approval in the U.S. as a major milestone for the company. We are also pleased with Isis Pharma’s progress with its pipeline. We are positive on the company’s collaborations which not only validate its antisense technology but also provide the company with funds in the form of upfront, milestone and other payments.

Other companies that look attractive include Zacks Rank #1 stocks Actelion Ltd. and AMAG Pharmaceuticals, Inc. (AMAG - Free Report) .

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