“Dials Could Turn” In Genzyme Deal, But Isis First Quarter is Better
This article was originally published in The Pink Sheet Daily
Executive Summary
Isis waits for $175 million license fee, as firms iron out mipomersen details.
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FDA screw-tightening on trial requirements likely means a change in terms for Isis Pharmaceuticals' deal with Genzyme for mipomersen, but how far the scale might tilt in Genzyme's favor remains fodder for speculation. Isis confirmed May 12 during an earnings call that the two firms, which disclosed their partnership plans in January, are "grappling" with "how to apportion the 50-50 split in current and future value," in the words of CEO Stan Crooke. The first-quarter bottom line got major help from the Genzyme deal and others, with Isis posting a loss that dropped 73 percent to $4.3 million, or 5 cents per share, compared to $13 million, or 16 cents per share, a year ago. Revenue jumped to $21.4 million from $2.5 million in the previous year's period, and Isis ended the quarter with cash and equivalents of $338.4 million, compared to $194 million at the end of 2007. In April, the companies pushed back by one year - to 2010 - their filing target for mipomersen's first indication: homozygous familial hypercholesterolemia, a rare disease with FDA orphan status (1 (Also see "Genzyme/Isis’ Mipomersen Development Outlook Pricier And Riskier After FDA Weighs In" - Pink Sheet, 25 Apr, 2008.)). A bigger pain, though, was the delay until at least 2012 for the filing in patients with high cholesterol at high risk of cardiovascular events, including heterozygous FH, a broader market. FDA wants an outcomes-based trial watching for heart events. Carlsbad, Calif.-based Isis' deal with Genzyme, of Cambridge, Mass., is valued at $1.9 billion, including up-front payments that total $325 million, of which a $150 million stock purchase already has taken place. Not yet in hand is a $175 million license fee. Lynne Parshall, Isis' chief financial officer, said during the earnings call that details of the deal were still in the works. "Any dial could be turned, but I agree with [Cooke]," she said, calling it "unlikely" the $175 million would be adjusted. In a same-day research note, analysts at Oppenheimer offered a "best guess" at how far Genzyme might want to turn the dials, and which ones. The 70-30 profit split in Genzyme's favor, set to become 50-50 at $2 billion in sales, could change to 80-20, or the $2 billion threshold might rise as high as $3 billion, Oppenheimer said, with milestone payments reshuffled or reduced. Genzyme might also ask for a hike in Isis' $75 million share of development costs - possibly doubling it - to defray costs of the outcomes study, which might require as many as 7,000 patients and last around three years, Oppenheimer said. Trouble for lipid-lowering drugs began with Merck/Schering-Plough's release of top-line data from the ENHANCE trial, showing that Vytorin (ezetimibe/simvastatin) lowered LDL levels in patients with FH over simvastatin alone, but did not improve cardiovascular outcomes (2 (Also see "Vytorin Fails To Show ENHANCEd Benefit Over Simvastatin In Plaque Reduction" - Pink Sheet, 14 Jan, 2008.)). Merck and Schering have an outcomes trial under way, IMPROVE-IT, enrolling 18,000 patients, with results due in 2012. IMPROVE-IT started out with a 10,000-patient target that rose to 12,500, before climbing to the current number, in order to get a significant event rate - a history that made analyst Joseph P. Schwartz at Leerink Swann wary of mipomersen's future. In a May 13 research note, Schwartz called the Genzyme/Isis drug "the most potent bad cholesterol lowering drug ever," but proving it to FDA's satisfaction could be expensive, since each trial patient costs about $10,000. - Randall Osborne ([email protected]) |