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Isis Posts Narrower-than-Expected Loss in Q3, Shares Up

Isis Pharmaceuticals, Inc.ISIS reported a loss of 30 cents per share in the third quarter of 2015, narrower than the Zacks Consensus Estimate of a loss 33 cents but wider than the year-ago loss of 23 cents. Isis' shares jumped 12.4% following the release of third-quarter results.

Total revenues in the quarter climbed 11.5% year over year to $49.1 million. Revenues were, however, below the Zacks Consensus Estimate of $53.6 million.

The Quarter in Detail

Research, development and patent expenses increased almost 45% year over year to $88.5 million. General and administrative expenses shot up 95.8% year over year to $8.8 million.

During the quarter, Isis expanded its existing partnership with AstraZeneca plc AZN and inked a strategic collaboration for the discovery and development of antisense drugs primarily focused on treating kidney and renal diseases. The deal could see Isis receive up to more than $4 billion in license fees and milestone payments plus tiered double-digit royalties on annual net sales for each of the programs.

Isis has made significant progress with its pipeline. The company reported positive data from the FOCUS FH study on Kynamro, which is being evaluated for the treatment of patients with severe heterozygous familial hypercholesterolemia. Results revealed that patients on Kynamro witnessed a statistically significant reduction in LDL cholesterol, thereby meeting the primary endpoint of the study. Full data from the study will be reported at an upcoming medical meeting.

While enrollment in the phase III study on volanesorsen (ISIS-APOCIIIRx) in patients with familial chylomicronemia syndrome is expected to be completed by year end, dosing of patients with familial partial lipodystrophy in another phase III study is expected to commence by the end of this year.

Isis is developing ISIS-TTRRx and nusinersen (ISIS-SMNRx) in collaboration with its partners. Currently, nusinersen is in two phase III studies for the treatment of spinal muscular atrophy in infants and children. Enrollment in both studies is expected to be completed by early next year.

On the other hand, ISIS-TTRRx is being developed in collaboration with GlaxoSmithKline plc GSK for all forms of transthyretin (TTR) amyloidosis. Glaxo plans to initiate a phase III study on ISIS-TTRRx in patients with TTR amyloid cardiomyopathy (both familial and wild type) early next year. Moreover, enrollment in a phase III study on ISIS-TTRRx in patients with familial amyloid polyneuropathy is expected to be completed by the end of this year.

Meanwhile, Isis continues to project an increase in operating expenses as its phase III programs progress and volanesorsen is launched globally.

Encouraged by the strong financial performance so far this year, Isis expects to improve the guidance it had provided at the time of releasing second-quarter 2015 results. The company had guided toward net operating loss in the low $30 million range and a cash balance of more than $750 million.

Isis expects to provide estimates for 2015 in early January next year.

Our Take

Isis' third-quarter results were encouraging with the company reporting a narrower-than-expected loss and revenues growing year over year. Moreover, we are positive on the latest deal with AstraZeneca.

Isis' agreements with leading health care companies continue to validate its antisense technology and provide the company with funds in the form of upfront, milestone and other payments. The company expects multiple pipeline related news through the remainder of the year and into 2016. We expect investor focus to remain on pipeline updates from the company.

Isis is a Zacks Rank #1 (Strong Buy) stock. Another equally ranked stock in the health care sector is Actelion Ltd. ALIOF .

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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