Genzyme Corp is forking out $325 million in upfront fees and could pay over $1.5 billion more as part of a licensing deal for Isis Pharmaceuticals’ new lipid-lowerer mipomersen.

The firms have entered into a strategic alliance in which Genzyme will develop and commercialise mipomersen, Isis' lipid-lowering treatment for high-risk cardiovascular patients that utilises novel antisense technology. Currently in Phase III, the drug has been shown in Phase II trials to reduce cholesterol and other atherogenic lipids more than 40% beyond reductions achieved with current standard lipid-lowering therapies, Isis says.

A weekly injectable therapeutic, mipomersen is being developed primarily for patients at significant cardiovascular risk who are unable to achieve target cholesterol levels with statins alone or who are intolerant of the latter. Its initial indication will be for patients with familial hypercholesterolemia with an anticipated filing in 2009.

There are approximately 1.5 million people in the USA and Europe with FH, an inherited disorder that causes exceptionally high levels of ‘bad’ low-density lipoprotein. The next indication will be for other patients with high cholesterol at high risk of cardiovascular events, a much larger patient population.

Under the financial terms of the pact, Genzyme will pay $150 million to purchase five million shares of Isis common stock, ie $30 per share compared to its closing price last night of $14.58 (though it shot up over 55% in after-hours trading). Upon the completion of final contracts, Isis will also receive a $175 million upfront fee.

50/50 profit split if revenues top $2 billion
On top of that, Isis may also get up to $825 million in development and regulatory milestones plus up to $750 million in commercial-related payments. The two firms will share mipomersen profits initially on a 70/30 Genzyme/Isis split and then 50/50 on a sliding scale as annual revenues ramp up to $2 billion. Genzyme will also have preferred access to future Isis drugs that target diseases of the central nervous system and certain rare conditions.

Isis had a number of potential suitors for mipomersen and chief executive Stanley Crooke said that "we have been very pleased with the quality and depth of interest in this flagship drug”. Some firms were offering more cash, but “as we evaluated the licensing terms from various parties, we felt that Genzyme would value mipomersen appropriately as a pipeline-transforming product”, he added.

It is Genzyme’s ability to bring niche products to the market at a premium price, such as the Gaucher disease treatment Cerezyme (imiglucerase), and Fabry disease drug Fabrazyme (agalsidase beta), that makes it an attractive partner in this case. Chief executive Henri Termeer described the alliance as an excellent strategic fit for his firm's business model and culture, adding that “this potential blockbuster is a very Genzyme-like product”.

In a research note, Bear Stearns analyst Mark Schoenebaum said that in addition to being a good fit for Genzyme's emerging cardiovascular franchise, the deal gives it a late-stage asset that could launch in 2009/2010, “a period during which many investors are worried that Genzyme will struggle to grow”.