Isis & Analyst: He Said, He Said

It’s not unusual for a financial analyst and a biopharmaceutical CEO to disagree about the value of a particular program or molecule. But when a CEO accuses an analyst of not having done his homework, it’s a different matter. But that’s precisely the kerfluffle brewing between Isis CEO Stanley Crooke and Leerink Swann analyst Joseph Schwartz. The reason for the skirmish: allegations in a recent note by Schwartz that Crooke calls unfounded.

But first some ancient history. According to an 8-K Isis filed with the SEC on Dec. 8, the biotech reacquired rights to a Phase I antisense cancer compound, LY225796, it partnered to Lilly in 2004. (For more on the deal and its end see here and here.) In an interview with “The Pink Sheet” DAILY, Isis’ Crooke said his company bought back the compound to jump start its own internal oncology program and diversify a pipeline overly focused on molecules treating cardiovascular and metabolic disease. Deal terms weren’t disclosed, but Crooke made it clear this wasn’t Lilly giving back ‘5796; Isis paid for the privilege.

Leerink’s Schwartz saw things quite differently, opining in a Dec. 9 note that Lilly lost interest in ‘5796, perhaps due to unimpressive Phase I data. “It is logical to conclude that lack of anticancer activity and/or toxicity may be the reason why Lilly is not pursuing it and Isis is not showing data,” he wrote. “In our view, this highlights why it is hazardous to ascribe any value to Isis’ early stage antisense programs, most of which attempt to modulate unvalidated targets.”

Not true, Crooke responded, saying that ‘5796 got lost in the shuffle at Lilly after its 2008 acquisition of ImClone. Crooke countered that the Phase I data were very promising and had not been presented at this year’s American Society of Clinical Oncology meeting because ‘5796 was still Lilly’s program at that point “and Lilly is very conservative about what it presents.” No word on why Isis didn’t include any updates on '5796 at its recent Dec. 3 R&D day in New York, however.

Crooke didn’t stop there, bluntly accusing Schwartz of providing “unfounded conjecture” in his notes on Isis.

“Joe has written extensively about Isis over the past two years, and has never spoken to me and never spoken to anybody senior at Isis. Joe has written a report about our analyst day and didn’t attend. And he’s been inaccurate and wrong on almost anything he’s said about Isis. This is another example of his stupidity.”

Ouch.

Perhaps what angered Crooke most was Schwartz’s speculation that Genzyme, which scooped up the antisense cholesterol med mipomersen in early 2008, might be the next partner to return an asset to Isis. While that may be unlikely, it’s not a fringe theory given Genzyme and Isis have already renegotiated their partnership once. And despite positive data at the recent American Heart Association meeting, mipomersen remains dogged by potential safety issues that seem likely to threaten both its approval and its uptake in the marketplace.

Still Crooke’s response to the statement was that of a bull seeing a red flag. “His conjecture that Genzyme will return mipomersen is as inane as anything he’s written,” Crooke told “The Pink Sheet” DAILY.

Who’s telling the truth, or does each side have it partly right? Certainly, products like ‘5796 come with considerable risks; it’s possible Lilly abandoned development to put more resources behind late-stage products to fill the looming revenue gap left by soon-to-be generic brands Cymbalta and Zyprexa.

The Phase I data for ‘5796—when or if they are released—will provide some clarity about the molecule’s likely utility. The fact that Isis paid to bring ‘5796 back in-house and plans to spend its own money developing it further suggests that maybe Crooke’s frustration with Schwartz is well-founded. Schwartz declined to comment for this piece.

By Joseph Haas

(Image by flickrer Tambako the Jaguar used under a creative commons license.)