ISIS Pharma Still Undervalued, Needham Says

In a report issued Tuesday, Needham analyst Chad Messer reiterated a Buy rating on shares of ISIS Pharmaceuticals, Inc. ISIS. The analyst alleges that the stock price does not fully reflect recent Spinal Muscular Atrophy (SMA) data, and thus raised his price target from $88.00 to $91.00.

The company recently divulged updates from a couple of ongoing Phase II studies with ISIS-SMNRx, and the analysts at Needham “remain impressed with the efficacy of these studies.” However, they think investors do not fully appreciate their significance.

Specifically, investors may be unaware of how sick SMA patients really are. The sickest Type I SMA infants have a life expectancy of 10 and a half months. The ongoing Phase II trial has shown an increased expectancy of 16.7 months (and the number continues to grow).

“Importantly, ISIS-SMNRx has corroborated these survival improvements with meaningful functional improvements in CHOP INTEND in infants and HFMSE in children,” Messer adds.

Related Link: Highlights From ISIS Pharmaceuticals At Goldman Sachs Healthcare Conference

Needham believes “the concomitant improvement in muscle function should alleviate any investor criticism that observed survival improvements are due to chance or external factors such as improvements in standard of care.”

With phase III studies well underway, the firm reiterates its belief that the efficacy confirmed so far by ISIS-SMNRx already exceeds the requisites for approval in a deadly pediatric orphan indication.

On top of the aforementioned, ISIS has many other drugs in the clinic. Positive data from any of them could drive shares higher, the analysts say. In addition, near-term value could be driven by a potential partnership for its diabetes franchise.