Isis Pharmaceuticals Inc.'s latest antisense deal – this time with AstraZeneca plc, for $25 million and $6 million more possible next year, plus potential milestone payments afterward – helps the company identify more targets and pay for Phase II work with a lymphoma compound, SIS-STAT3Rx, to which the new partner also bought a license.

But the pact failed to thrill analyst Edward Tenthoff with Piper Jaffray, who wrote in a research report that the company "continues to give up significant economics" in such arrangements. Tenthoff maintained his "neutral" rating on the stock.

Carlsbad, Calif.-based Isis' stock (NASDAQ:ISIS) did not budge much on the news, closing Tuesday at $9.55, up 13 cents.

"A number of the [five cancer targets involved in the AstraZeneca deal] are really quite novel, we think," said Stanley Crooke, Isis' chairman and CEO, during a conference call. "Most of them are at very early stages of discovery."

Brett Monia, senior vice president of antisense drug discovery for the company, did not say whether the targets would involve rare or orphan diseases, but told investors that "all of the targets will have a strong genetic component."

After pointing out that the targets, proprietary to London-based AstraZeneca, would not otherwise have been available to Isis, Lynn Parshall, chief operating officer and chief financial officer, touted the financial terms.

The deal could be worth more than $1 billion to Isis over the long haul, Parshall said, and nearer term might bring $50 million in a milestone payment related to a license that is part of the agreement.

Enter the early stage lymphoma compound ISIS-STAT3Rx, for which Isis will complete the ongoing Phase II trial, before AstraZeneca takes up further development. ISIS-STAT3Rx is designed to inhibit the production of signal transducer and activator of transcription 3 (STAT3), overexpressed in solid and blood tumors.

Crooke described the study in progress as "a relatively small Phase II study that focuses on patients with advanced lymphoma, especially diffuse large B-cell lymphomas. We've already seen two very significant durable responses [that] impressed not just us but the investigators and the folks at AstraZeneca."

The up to $50 million milestone related to the trial is "graduated depending on the number of responses in what constitutes a very small number of patients," Crooke said, adding that a "very good probability" exists that Isis will see the full amount of the milestone before much longer.

Parshall said the company is "still at the beginning of enrolling patients, so it's hard to predict [when data might be available], but I would say late in the year next year, or early 2014."

Isis' general approach, Crooke said, is to partner earlier in disease indications such as many cancers, where risks and costs are high, and where positive Phase II results are less predictive of Phase III success. Other indications would be handled differently. "Those we would want to hang onto and partner after we've completed definitive Phase II studies," Crooke said.

The week has been busy for Isis, which also sealed a deal with Biogen Idec Inc., of Weston, Mass., to discover and develop antisense drugs for several undisclosed targets in the area of neurological and neuromuscular disorders. It's the third alliance with Biogen. Others involved spinal muscular atrophy and myotonic dystrophy Type I. (See BioWorld Today, July 2, 2012.)

In the most recent deal, Biogen is paying Isis $30 million up front to discover a lead candidate for each of three targets.

Isis will be eligible for milestone payments, and Biogen has an option to license a drug from each of those three programs through completion of Phase II trials. Payments to Isis could total $200 million, including license fees and regulatory milestones per program, plus additional double-digit royalties.

Wrote Piper Jaffray's Tenthoff: "This deal mirrored a 2010 alliance with GlaxoSmithKline [GSK], reflecting little strategic corporate development over the course of two years, in our view."

The GSK contract gave Isis $35 million up front, amortized over the five-year agreement, and with up to another $155 million in pre-licensing milestones, averaging about $20 million for each of the five programs included. (See BioWorld Today, April 1, 2010.)

Awaiting word on FDA approval is Isis' Kynamro (mipomersen) for homozygous familial hypercholesterolemia. In October, members of the Endocrinologic and Metabolic Drugs Advisory Committee voted 9-6 in favor of approving Kynamro, after hearing testimony about liver problems, cancer in mice, possible cardiac risk, troubling immune responses and significant trial dropout rates. (See BioWorld Today, Oct. 19. 2012.)

Tenthoff expects Kynamro to win market clearance by the Jan. 29, 2013, PDUFA date, and European approval around year-end, but predicted its use would be "limited to the most severe patients."