January 9, 2008 / 10:09 PM / 12 years ago

INTERVIEW-ISIS CEO says investors undervalue Genzyme deal

By Ransdell Pierson

NEW YORK, Jan 9 (Reuters) - The chief executive of Isis Pharmaceuticals Inc ISIS.O forecast on Wednesday that company shares would rebound after investors realize the true value of the drugmaker’s recently announced cholesterol-drug deal with Genzyme Corp GENZ.O.

Isis shares jumped more than 50 percent to almost $22 in after-hours trading on Monday after Genzyme announced it would license Isis’ experimental cholesterol fighter, mipomersen, and could eventually pay Isis more than $1.5 billion in milestone payments and a 50 percent share of profits from the medicine.

But the stock drifted down to close at $16.61 on Wednesday, only 14 percent higher than before the Genzyme deal was announced.

“We are extremely disappointed, but we don’t expect it to last,” Stanley Crooke said in a telephone interview. “We think there will be a rational response to what we’ve accomplished. This is a drug that has worked stunningly well” in clinical trials.

Crooke said the licensing deal is one of the best in history for a drug that has completed mid-stage trials. He noted Isis has forged other drug-development deals in the past year with Bristol-Myers Squibb Co (BMY.N) and Johnson & Johnson (JNJ.N).

“I would be very disappointed if we didn’t announce more deals in the next year or two,” Crooke said. “I think there are all kinds of other opportunities for us.”

Genzyme said it will pay Isis $150 million, or $30 per share, for five million shares of its common stock — or more than twice the $14.58 closing price of Isis shares on Monday.

Genzyme said it will also pay Isis a $175 million upfront fee to license its drug and eventually up to $825 million in development and regulatory milestone payments, plus up to $750 million in commercial milestone payments.

Crooke on Wednesday said he expected Isis to receive the first $525 million of the development and regulatory milestone payments within the next four years, after the company seeks approvals for the first three uses of mipomersen.

The uses would include treatment of two relatively rare variations of high cholesterol linked to genetics. The third indication would be for more-mainstream patients whose high cholesterol is not highly tied to family history.

A fourth development and regulatory milestone payment, of $250 million, would hinge on future approval of a second- generation Isis cholesterol drug that Genzyme would also sell.

Genzyme said in a regulatory filing on Wednesday that it would pay Isis three commercial milestone payments of $250 million each. They would hinge, respectively, on the drug achieving annual sales for two consecutive years of $3 billion, $4 billion and $5 billion.

“The milestone payments are extra rewards for us,” Crooke said.

He said the most significant payments would instead be an initial 30 percent share of profits from sales of the medicine that would grow to a 50 percent once global annual sales reach $2 billion or more.

(Reporting by Ransdell Pierson; Editing by Andre Grenon)

((Reuters Messaging: ransdell.pierson.reuters.com@reuters.net; 646-223-6034; ransdell.pierson@reuters.com)) Keywords: ISIS CEO/

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