Shares of Isis Pharmaceuticals Inc. rose nearly 30 percent Tuesday after the company ended months of speculation by choosing Genzyme Corp. as its partner for the Phase III lipid-lowering drug mipomersen (formerly ISIS 301012).

An auction process for the drug began in August, but Isis Chairman, President and CEO Stanley Crooke told BioWorld Today he started laying the groundwork long before that.

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.)

Those deals "set the price point" for negotiations around mipomersen, letting potential bidders know that plenty of companies were willing to pay up for drugs based on Isis' second-generation antisense technology, Crooke said.

The mipomersen auction process involved more than 10 companies, Crooke added, noting that the "total value of the Genzyme offer . . . was the best."

That offer included $325 million up front, $175 million of it in cash and $150 million of it in equity. The equity component calls for Genzyme to buy 5 million shares of Isis at $30 each, more than double the company's Monday closing price of $14.58.

Isis also stands to get up to $1.575 billion in milestone payments, of which $825 million are tied to development and approvals and $750 million are tied to commercialization. Genzyme will take over responsibility for mipomersen through a two-year transition period, during which Isis' costs will be capped at $75 million. Isis also recently spent $120 million to reacquire rights to mipomersen and two other drugs from Symphony GenIsis, a $75 million financing vehicle established by Isis and Symphony Capital Partners LP.

But the most attractive aspect of the deal may lie in the profit sharing. Once Genzyme begins to sell mipomersen, Isis will get 30 percent of the profits. That figure will increase to 50 percent as mipomersen annual revenues reach $2 billion.

In a research note, Jefferies & Co. Inc. analyst Salveen Kochnover called the deal "very favorable" to Isis, with terms that "exceed both our and Street expectations."

Isis investors liked the arrangement too, pushing shares of the Carlsbad, Calif.-based company (NASDAQ:ISIS) up $4 to close at $18.58 on Tuesday. Meanwhile, shares of Cambridge, Mass.-based Genzyme (NASDAQ:GENZ) rose 31 cents to close at $77.41.

Financials aside, Crooke emphasized several additional reasons that Isis chose Genzyme as a partner, including cultural fit, commitment to the product and expertise in marketing "novel breakthrough products for significant unmet medical needs."

Mipomersen, a second-generation antisense drug targeting apolipoprotein B-100, might not seem like the type of highly targeted niche product usually associated with Genzyme . . . especially considering that the $30 billion worldwide market for lipid-lowering drugs is dominated by blockbuster statins like Lipitor (atorvastatin, Pfizer Inc.).

But mipomersen is designed to compliment rather than replace statins. An estimated 80 percent of high cardiovascular risk patients fail to meet their target cholesterol levels using statins, and Phase II data showed that mipomersen can decrease apoB levels by 42 percent and LDL cholesterol levels by 48 percent beyond what statins can achieve alone. Further, Isis' market research indicated mipomersen will be prescribed by lipid experts rather than general practitioners, making Genzyme's expertise in selling to targeted markets using a niche sales force a good fit.

Crooke said Isis and Genzyme also agreed on a development path that will ensure "the neediest patients get the drug first," allowing for the collection of additional safety data before expanding into broader markets.

The plan is to begin by targeting patients with familial hypercholesterolemia (FH), a genetic disorder affecting about 1.5 million people in the U.S. and Europe. A Phase III trial is under way in homozygous FH and is intended to support a new drug application in 2009. A supplemental NDA for heterozygous FH is expected the following year. After that, the companies will turn their attention to the much broader opportunity in non-FH, high-risk, high cholesterol patients.

Isis and Genzyme also will work together to improve on the once-weekly intravenous formulation of mipomersen with a once-monthly version. Additionally, they plan to evaluate second- and third-generation compounds, some of which could be oral.

The partnership also gives Genzyme preferred access to future Isis drugs for central nervous system disorders and certain rare diseases. Isis has preclinical programs under way for amyotrophic lateral sclerosis and Huntington's disease, both of which might be of interest to Genzyme, and Crooke said Isis is also looking at CNS diseases with a motor component, such as Parkinson's disease.