ISIP--looking for a bounce tomorrow
<<Isis Shares Plunge as Crohn's Disease Drug Fails (Update4)
(Adds closing share price.)
Carlsbad, California, Dec. 15 (Bloomberg) -- Isis
Pharmaceuticals Inc. shares lost nearly two-thirds of
their value after a late-stage study of the company's drug for
Crohn's disease showed it wasn't effective against the bowel
inflammation disorder.
Isis called off plans to seek U.S. Food and Drug
Administration approval of the drug, known as ISIS 2302. The
company also said it aims to halve its spending rate, saving $30
million to $35 million over the next year, by confining its
efforts to a handful of drugs for which the first stage of human
studies have begun, or are soon to start.
''We just had an all-employee meeting,'' said Debby Jo
Blank, executive vice president for Isis. ''We are all in a state
of shock -- we know we need to have a substantial reduction in
our workforce but we don't want to do it precipitously; we've
only been living with this Crohn's data for two days.''
Company officials will meet beginning Friday to come up with
a formal restructuring plan and determine which programs it will
retain, and where employees will be fired, Blank said.
Shares in the unprofitable California biotechnology company
fell 9 29/32, or 64 percent, to close at a 52-week low of 5 19/32
in Nasdaq trading of 7 million, 22 times the stock's three-month
daily average. The stock was the biggest percentage loser on U.S.
markets.
''This is basically an early stage company now -- you have
to think of it that way,'' said Laurence Blumberg, president of
Blumberg Capital Management, which manages a health-care hedge
fund. ''Until we see efficacy from this drug the stock should be
in the mid-single digits.''
Disables Genetic Instructions
Isis develops drugs based on antisense technology, an
approach that aims to disable the genetic instructions for
a disease. Antisense technology designs drugs that reverse the
bits of DNA code involved in a particular disease, like a mirror
image. When the sections of reverse code and DNA meet, they bind
together and neutralize the DNA's harmful activity.
Blumberg said he shorted Isis shares three weeks ago
because he thought the Crohn's study results would be
disappointing, based on earlier research using antisense
technology for other inflammatory diseases.
Isis won FDA approval last year for an injected antisense
drug called Vitravene, which fights a relatively rare AIDS-
related eye disease. The approval was considered a triumph for
the field of antisense, which had been met with skepticism and
encountered repeated setbacks during the development process.
Antisense Technology's Future
Analysts and investors were divided today over whether Isis'
failure in Crohn's disease cast doubt on the potential of
antisense technology.
''I don't think there is much value to the antisense
platform,'' said Blumberg. ''It is very likely from this study
that IV forms of antisense aren't going to be effective.''
Jim McCamant, editor of the Medical Technology Stock Letter.
McCamant said the market reaction was ''overdone,'' though.
''We have overwhelming evidence that (antisense) works at
this point,'' said McCamant, who said he was maintaining his buy
rating on Isis stock, and called the share price a buying
opportunity.
The company is also working on topical and oral versions of
antisense for conditions including hepatitis, psoriasis, and
cancer.
Some of Isis' difficulties may be attributed in part to the
nature of working with a new type of therapy that is still not
thoroughly understood, and to the stubborn nature of Crohn's
disease, analysts said. And because antisense has yet to be
validated by a raft of successful products, the defeat of Isis'
most advanced compound may take on a greater import with
investors, they said.
''It's very bad for the company and it's very bad for
antisense, but we shouldn't write antisense off,'' said Steven
Delco, an analyst with Miller, Tabak Roberts Securities. ''It's
clearly a case of don't throw the baby away with the bathwater; I
still believe in the (antisense) platform, and Isis owns that
platform.''
Delco lowered his rating on Isis to a ''hold'' from a ''long-
term buy'' because of the drug's failure.>>
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