Managing Editor

Isis Pharmaceuticals Inc. continued piling up the cash, signing a $20 million up-front deal giving Abbott a stake in Isis subsidiary Ibis Biosciences Inc. and perhaps setting in motion what could be a $230 million Abbott purchase of Ibis.

The deal brings to $425 million the amount of cash Isis has brought over the past 12 months through licensing and partnering deals.

In the Ibis deal, Abbott is paying $20 million up front to acquire a 10.25 percent stake in Ibis, and it has the option of paying another $20 million by July 31 to boost that equity holding to 18.6 percent. That extra $20 million also would give Abbott an exclusive option to purchase the remaining equity in Ibis for an additional $175 million to $195 million through June 30, 2009. The option exercise price can rise to $190 to $210 million if Ibis successfully completes milestones.

In addition, if Abbott ends up owning Ibis, Isis shareholders would continue receiving earn-out money based on Ibis revenues, plus Isis would keep all of the Ibis cash, Isis Chairman, President and CEO Stanley Crooke said during a conference call.

Crooke said the Abbott deal achieves all of the goals Isis had set for the Ibis subsidiary by providing capital to make Ibis a stand-alone company, and providing Abbott's considerable resources to advance Ibis technology to major platform status.

The target of Abbott's affection is the Ibis T5000 biosensor system, which simultaneously can identify thousands of types of infectious organisms in a sample, without needing to know beforehand what might be present in the sample.

Previously, the T5000 has flourished on government contracts, and was developed with funding from the Defense Advanced Research Projects Agency, the Centers for Disease Control and Prevention, the FBI, the Department of Homeland Security and the National Institute of Allergy and Infectious Diseases. Isis reported that through the end of 2006 Ibis Biosciences earned $57.5 million in revenue from various government agencies.

Michael Treble, president of Carlsbad, Calif.-based Isis, noted that the link with Abbott and its expertise in infectious diseases and diagnostics, gives Ibis a leg-up in moving more quickly into the commercial market. He said Ibis is planning to "aggressively develop" a series of assay kits for the clinical diagnostic marketplace.

The deal with Abbott Park, Ill.-based Abbott comes about three weeks after Isis announced a deal to partner with Genzyme Corp. for the Phase III lipid-lowering drug mipomersen (formerly ISIS 301012). (See BioWorld Today, Jan. 9, 2008.) In what amounted to an auction, Genzyme agreed to pay $325 million up front - $175 million of it in cash and $150 million of it in equity. Last May, Isis licensed a preclinical lipid-lowering drug to Bristol-Myers Squibb Co. in a deal worth $192 million, including $15 million up front. Then in September, Isis partnered two early stage diabetes drugs and two metabolic disease discovery programs with Johnson & Johnson subsidiary Ortho-McNeil Inc. for $440 million, including $45 million up front. (See BioWorld Today, May 10, 2007, and Sept. 14, 2007.)

Shares of Isis (NASDAQ:ISIS) rose 46 cents Thursday, to close at $15.60.