Isis Pharmaceuticals Inc. shares (NASDAQ:ISIS) rose $6.60, or 10.7 percent, to $68.17 Monday as Johnson & Johnson-owned Janssen Biotech Inc. committed to pay it up to $835 million to discover and develop antisense drugs to treat autoimmune disorders of the gut. The deal gives Janssen options to license three therapeutic candidates in an area where it has established broad expertise with drugs such as Remicade (infliximab) while helping Isis continue to expand the breadth of antisense therapy's utility, further developing its potential for oral administration and local action, Isis CEO Stan Crooke told BioWorld Today.

Crooke called J&J the perfect partner, noting the company's deep understanding of inflammatory and autoimmune diseases of the gut and solid formulation experience.

The agreement covers three programs for which Isis will receive $35 million in up-front payments, including a payment to initiate human lead optimization on the first collaboration target. Isis is also eligible to receive nearly $800 million in development, regulatory and sales milestone payments and license fees for the programs.

Milestones for the programs are spread fairly evenly throughout, said Crooke, with a significant emphasis on the accomplishment of technical achievements along the way.

In addition, it will receive tiered royalties that on average are double digits on sales from any product that is successfully commercialized.

Janssen has the option to license a drug from each of the programs once a development candidate is identified. Should it exercise those options, it will assume global development, regulatory and commercialization responsibilities.

It's not the first time Isis has explored oral formulations of its drugs. In 2007, it demonstrated modest but significant bioavailability of an oral formulation of the homozygous familial hypercholesterolemia therapy Kynamro (mipomersen) – now partnered with Genzyme Corp. – that reduced apolipoprotein B100 and low-density lipoprotein-cholesterol. But while that study demonstrated the technical feasibility of oral dosing for antisense therapy, it wasn't commercially feasible at the time given the high doses required. Since then, said Crooke, the company's second-generation and generation 2.5 chemistry have boosted the potency of its antisense candidates while both lowering the required dosages and raising their bioavailability, bringing commercial viability to the fore.

The company has also explored locally targeted antisense therapies in the past with alicaforsen, an ICAM-1 inhibitor the company has since licensed to Atlantic Healthcare Ltd. Prior to that, Isis showed the drug could provide clinically significant relief to ulcerative colitis patients when delivered by way of an enema. (See BioWorld Today, Dec. 3, 2004.)

Though the focus of the Janssen deal is on the development of specific locally targeted oral therapies, Crooke said that "obviously everything you do along that trajectory is a step forward for oral administration in general."

While analysts had posited early last year that oral administration might be a big advantage for Kynamro competitor Aegerion Pharmaceuticals Inc.'s Juxtapid (lomitapide), when sales of the drugs were compared in November 2014, the route of administration turned out to be far less important than other factors, including lower U.S. prescription growth, analysts said. (See BioWorld Today, Nov. 3, 2014.)

But Isis is focused elsewhere: It has continued to move ahead with Genzyme, Biogen Idec Inc. and Glaxosmithkline plc, building a platform that has put the company on solid footing with a reported $73.2 million in cash and cash equivalents at Sept. 30, 2014.

Investors too are paying close attention to the company's more near-term catalysts, including phase III studies of Biogen-partnered ISIS-SMNRx for spinal muscle atrophy, GSK-partnered ISIS-TTRRx for TTR amyloidosis and the unpartnered ISIS-APOCIIIRx program, which could help patients with familial chylomicronemia syndrome.

"These days, we don't really need to do deals for dollars," said Crooke. "We're in a position where the deals we do are strategic."