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Isis, Biogen Seal Bond with $100M Up-Front Neuro Deal

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By Marie Powers
Staff Writer

Biogen Idec and Isis Pharmaceuticals Inc. signed their fourth partnership deal in two years with the goal of applying antisense technology to the discovery and development of therapies for neurological diseases. The financial terms call for $100 million up front to Isis, $220 in potential milestones for each antisense candidate and additional funding for clinical trials conducted by Isis under the collaboration.

The companies made clear the deal raised the relationship from the level of one-off collaborations to a broad strategic partnership that will fully exploit the role of antisense technology in multiple neurology applications, potentially including peripheral nerve disease.

“The Biogen Idec relationship is now clearly strategic,” Stanley Crooke, chairman and CEO of Carlsbad, Calif.-based Isis, said Monday morning on a conference call with investors. “What began at the beginning of 2012 as a single drug transaction has evolved into what is now an exclusive relationship for Isis.”

The six-year research agreement, which provides both partners with flexibility to move discoveries forward, is designed to leverage Biogen’s expertise in neurology with Isis’ prowess in antisense technology. By creating a joint working team to select and validate disease targets and conduct drug discovery activities, Biogen and Isis are aiming to validate at least a dozen targets over the term of the agreement “to help build a world-class neurological disease franchise for Isis,” said Lynne Parshall, the company’s chief operating officer.

Isis will be primarily responsible for drug discovery and early development of antisense therapies, while Biogen, of Weston, Mass., will be responsible for the creation and development of small molecule treatments and biologics. In each case, Biogen will determine the molecular modality best suited to advance a candidate through clinical development. Isis will retain control of development through the first proof-of-concept study. If Biogen exercises its option, on pre-negotiated terms, it also assumes responsibility for later stage development and commercialization of drugs arising from the collaboration.

Biogen’s up-front payment of $100 million will expand core research capabilities at Isis, Parshall said. The amount of milestone payments, license fees and royalty payments to Isis for compounds developed through the collaboration is dependent on the type of molecule advanced by Biogen. For each antisense molecule, the company will receive $10 million and have the opportunity to earn an additional $250 million in pre-commercial milestone payments, plus double-digit royalties and additional amounts related to the cost of clinical trials conducted by Isis.

But Isis wins even if the joint clinical team determines that other modalities, such as monoclonal antibodies, are more appropriate for advancing the technology. In each case, the company will receive $5 million and have the opportunity for $80 million in pre-commercial milestones, plus single-digit royalties.

If Biogen passes on an asset developed through the partnership, Isis is free to advance the compound internally or seek another partner.

“This collaboration represents a win-win situation,” Parshall said, “and fully exploits the potential of antisense for neurological disorders.”

Most of the up-front payment will be reflected as R&D expense in Biogen’s third quarter financial results, according to the companies. As a result of the transaction, Isis plans to update its 2013 guidance when the company reports third quarter financials in early November, Parshall said.

Companies Still Mum on Initial Targets

The first partnership between Isis and Biogen in antisense technology involved an option to license rights to ISIS-SMNRx, then a Phase I-stage drug aimed at spinal muscular atrophy (SMA), a genetic neuromuscular disease with no approved therapy that is estimated to affect about 30,000 to 35,000 patients in the U.S. That deal provided Isis with $29 million up front, development milestones of up to $45 million, up to $225 million in license fees and regulatory milestones and double-digit royalties. (See BioWorld Today, Jan. 5, 2012.)

Following a successful Phase I study, earlier this year, Isis moved ISIS-SMNRx into a Phase II study, and registration trials are expected to begin next year, Parshall said.

On the heels of the SMA collaboration, “it was easy for the teams to decide to pursue another antisense target,” Parshall said, citing the program on myotonic dystrophy Type I (DM1), a muscular wasting disease also known as Steinert disease, then in the discovery phase. That pact, signed in July 2012, also included a relatively modest up-front payment of $12 million in exchange for Biogen’s option to license the lead antisense drug candidate against DM1 any time through the completion of Phase II studies. In just a year, the company has identified a candidate that it expects to advance into a human trial in the first half of next year, Parshall said. Isis could earn up to $59 million in milestone payments associated with clinical development and up to $200 million in license fees and regulatory milestones, plus double-digit royalties, if the option deal is struck. (See BioWorld Today, July 2, 2012.)

The third deal, inked at the end of 2012, covered undisclosed targets in neurological and neuromuscular disorders. Biogen paid Isis $30 million up front to discover a lead candidate for each of three targets. That deal also was structured with milestone payments to Isis in return for Biogen’s option to license a drug from each of the three programs through completion of Phase II trials.

All told, the partnerships represent $170 million in up-front payments and up to $4 billion in milestones, according to Parshall.

Crooke also reconfirmed that Isis intends to remain small, nimble and focused on innovation. “In short, our goal is to avoid becoming a fully integrated pharmaceuticals company,” he said. “This means that products created by Isis will eventually be partnered.”

Isis officials and Al Sandrock, Biogen’s senior vice president, neurology research and development, were cagey about the first neurology targets selected and the precise reasons for their confidence in the strength of the platform. However, RBC Capital Markets analyst Michael Yee speculated in a research note that the fourth Biogen deal “signals optimism about the current SMN-Rx program and future potential opportunities.” He added that “Biogen’s long-term pipeline is one of, if not the best, in large-cap biotech.”

On Monday, shares of Isis (NASDAQ:ISIS) gained $3.89, or 14 percent, to close at $31.81, while shares of Biogen (NASDAQ:BIIB) picked up $3.68, to close at $228.86.