By Randall Osborne


Investors may still wring their hands and watch from the sidelines, wondering whether antisense drugs might duplicate the comeback triumph of monoclonal antibodies, but analysts said the recent deal between Isis Pharmaceuticals Inc. and Eli Lilly and Co. ought to tell them something good.

Lilly cast its vote for antisense in a potential $400 million agreement with Isis, based largely on the antisense cancer compound ISIS 3521, a selective inhibitor of protein kinase C-alpha expression, just starting one Phase III study in non-small-cell lung cancer. As part of the deal, a second Phase III study of the drug is planned.

Ballyhooed by analysts and the company with such phraseology as "watershed for the industry" and "the coming of age of antisense," the Isis-Lilly pact ($200 million committed, with that much more possible in milestone payments) made Wall Street glow. Isis' stock soared almost 48 percent.

"People thought for a while that this technology wouldn't work, or it was too difficult to make it work," said analyst Jim McCamant, with Moors & Cabot. "There were two significant challenges. One was getting the [drugs] to be stable, getting them across the cell walls. Two was the cost problem. But it's like most things in technology generally. The more you do, the better you get at it, and prices continue to decline very rapidly."

An early booster of Isis because of its GeneTrove database, McCamant is not shy about comparing the firm to the likes of genomics powerhouse Human Genome Sciences Inc., which McCamant said has "not as good a pipeline [as Isis], and not as useful genetic information."

Such matters could be argued over, but McCamant said there's no doubt the promise of antisense is reaching fulfillment, and Isis has the potential to become a drug company worthy to stand alongside those such as Millennium Pharmaceuticals Inc.

"People will begin to see it in that light over the next couple of years," he said.

Isis and Lilly also will be looking for antisense drugs against metabolic and inflammatory disease, aiming to use GeneTrove for figuring out the roles of as many as 1,000 human genes. Upwards of 300 are to be validated as potential drug targets, and any that end up in development could mean more milestones for Isis.

All this comes the year after ISIS 2302, for Crohn's disease, faltered in a Phase III trial, a failure that caused antisense naysayers to congratulate themselves. Isis had made the magic happen once, they said, but anything more from antisense ¿ in which research has been ongoing for more than two decades already ¿ would be a long time coming.

The "once" was Vitravene (fomivirsen), an for which Isis won FDA approval in 1998 as a fighter of cytometalovirus-induced retinitis. Often a problem for AIDS patients, the opportunistic virus can blind such patients. But, as much of an achievement as approval was for Vitravene, the indication for the drug is hardly enormous.

For the first blockbuster antisense drug, the world continues to wait. And, especially now, most eyes are on Isis. Regarded as the antisense leader, Isis said it could launch the cancer drug that is the focus of the Lilly deal as early as 2003.

"That's probably when we'll get the anticancer drug approved, and by then we'll be in late-stage trials in psoriasis," McCamant said. "They have three [psoriasis] compounds, two in the clinic, although it's something that people haven't talked about." The drugs are topical, although one was initially tested as injectable, he said.

Big pharma has pledged its faith in Isis antisense work before, although not to the same degree as Lilly. This spring, Merck & Co. Inc. agreed to pay up to $50 million in licensing and milestone fees for ISIS 113715, an antisense drug candidate for Type II diabetes. Though the drug was only in preclinical study, Merck climbed aboard with a promise of about $10 million in revenues for Isis the first year. ISIS 113715 inhibits the gene encoding PTP-1B, a negative regulator of insulin receptor signaling.

Nor was that Isis' only good news lately. In July, Isis collaborated with Celera Genomics to use GeneTrove for identifying the roles of more than 200 novel genes, investigating cancer, angiogenesis, inflammation and metabolic diseases. Isis keeps the right to use what it finds out for antisense drugs. It looks like the perfect hookup of genomics data with antisense. Friends of both have said for a long time that the pair would make a fine marriage.

Antisense drugs ¿ nucleotides linked together in short chains, or oligonucleotides ¿ are designed for binding to a specific sequence of nucleotides in its messenger RNA target, thus blocking production of the protein encoded by the target mRNA. When they work, they are more selective, attaching to mRNA targets at multiple points of interaction at a single receptor site. Ordinary drugs typically bind only at two points.

Instead of figuring out the complicated, unpredictable structure of a protein target (as typical drug development does), antisense research works with the more comprehensible mRNA, identifying its receptor sequence and continuing from there.

Firms other than Isis have been active in antisense as well. Hybridon Inc., for example, had a stack of important patents in the area, and seemed on a legal collision course with Isis, until the pair signed an agreement in May. The deal cost Isis $34.5 million ¿ $15 million in cash, and the rest in stock over two years ¿ but gave Isis an exclusive license to all of Hybridon's antisense chemistry and delivery patents, plus technology.

Hybridon kept the right to keep practicing its licensed antisense patent technologies, held onto sublicensing opportunities and gets 35 percent of Isis revenues when Hybridon's intellectual property is involved in Isis out-licensing. But Isis rightly saw the deal as solidifying its top antisense position.

Which is not to say there are no other companies working in the space that have made news this year. In April, AVI BioPharma Inc. teamed up with Exelixis Inc. to provide the latter with Neugene morpholino antisense agents. The five-year plan is for Exelixis to define gene function in vivo on a genome-wide scale in zebrafish and other models, validating and screening targets where antisense might work.

AVI will do preclinical and clinical studies on antisense candidates, with any products jointly owned and Exelixis having an option to co-develop them.

In March, another player, Genta Inc., with its systemically delivered antisense cancer compound Genasense, published several studies on the activity of the drug's target: the Bcl-2 protein, overexpressed in many cancers. Genasense is in Phase III studies in melanoma, myeloma, chronic lymphocytic leukemia and acute myeloid leukemia.

"It's a pretty small field, because of the attrition," McCamant told BioWorld Financial Watch. "Genta is probably the closest, about the same stage [as Isis]. The thing that separates Isis is the breadth of the programs, and the depth of the intellectual property position. They basically have control of Hybridon's patent estate. And they got Gilead's, two and a half years ago. Those were the two pioneers in the business."

Isis said in December 1998 that it had acquired all of the antisense patents held by Gilead Sciences Inc. for $6 million, payable in four installments over the next three years.

Hybridon and Gilead "were the two pioneers in the business," McCamant said. "When Gilead went public [in 1992], it said it was an antisense company, period. Talk about extravagant claims."

Genta, for its part, "probably doesn't need a license [from Isis to continue its current work], but, as I understand it, Isis has others pending that would require them to have a license."

For Isis, he added, shared royalties from other firms "long term are a big deal."

Andrew Gitkin, analyst with UBS Warburg, said his firm began coverage of Isis about a month ago, with a "buy" rating, based on ISIS 3521 and GeneTrove.

"We were not too surprised when they announced the deal with Eli Lilly," Gitkin told BioWorld Financial Watch. "However, we were surprised at the size and scope of the deal. We thought it would take the company several deals with several companies to get what they got out of Eli Lilly."

The visibility provided by the Lilly agreement, not to mention the capital from it, will let Isis further advance its pipeline, causing Gitkin to view the stock "very, very favorably," and raise its price target from $16 to $19. Last week, the shares (NASDAQ:ISIP) hovered between $16 and almost $16.75.

Another, earlier antisense player making news this year is EpiGenesis Pharmaceuticals Inc., which in March entered a $100 million deal with Taisho Pharmaceuticals Co. Ltd., based on EpiGenesis' Phase I antisense drug candidate, EPI-2010, for asthma, which targets the adenosine A1 receptor. EPI-2010 came out of EpiGenesis' respirable antisense oligonucleotides, or RASON, program, and delivers the drug directly to the lung. The firm said it aims to seek FDA approval in 2005.

But Gitkin and McCamant said the antisense bet to play is Isis, and antisense will soon prove worth the trouble.

"You can't like Isis if you don't like the field, and Isis has an unusually strong position," McCamant said. "The stock has been ridiculously undervalued. People don't understand how much they have going on."