Isis faces up to lagging stock price at annual meeting


CARLSBAD ---- Based on just about every indicator, Isis Pharmaceuticals Inc.'s performance has been spectacular. Except for the one investors care about most, the biotech company's lagging stock price.

Isis has announced a slew of huge deals with big pharmaceutical partners and major progress in developing potentially blockbuster drugs. However, shares have been stuck at the $10 to $12 level for the past few years. A few years earlier than that, shares had reached $25 each.

At the company's annual shareholders meeting Thursday, CEO Stanley T. Crooke talked about the uncomfortable gap between Isis' progress with its drugs and lack of progress with stock value, and what Isis plans to do about it.

Asked by an audience member if Isis is concerned about the stock price, Crooke gave a one-word reply:


That pithy quip prompted a round of laughter before Crooke added that the question was a serious one, and deserved more than a "flippant" reply.

Another question: Does Isis have a strategy to prevent a hostile takeover?

"You bet," Crooke said. "Step one is to get the stock price up."

"At the board and the company, we've had a lot of conversations over the last few years about our stock price. None of us understand it," Crooke said.

"We've executed, we think, flawlessly over the last five years, and it hasn't reflected itself in the stock price. And we know that eventually, we have to see what we accomplish in the stock price, and we have to return our investment to you. Getting our stock price up this year is a critical thing."

Even if the company performs flawlessly this year, bonuses will be "significantly penalized" if the price of Isis stock doesn't rise, Crooke said.

Gauging value

Isis' market value as of last week hovered around $1 billion. That makes it more valuable than all but a handful of biotech companies.

But Crooke said the company should be valued much higher, based on the worth of Isis' drugs in development; milestone payments and royalties from its partners; and the likelihood of even more drugs from its proprietary and increasingly powerful "antisense" technology.

Crooke didn't specify what steps Isis would take to get its stock price to rise. He said the price should go up of its own accord when Isis' flagship cholesterol drug, Kynamro, hits the market. The U.S. Food and Drug Administration and European regulators are reviewing a marketing application for Kynamro.

"Eventually, Kynamro will take care of the stock price, because then we'll become an earnings story, and it becomes pretty easy to calculate" Crooke said. "But we need to do that before then."

Isis' big pharmaceutical partners provide another line of defense, Crooke said. These companies, including GlaxoSmithKline, Genzyme (now part of Sanofi-Aventis), Novartis and Biogen Idec, have made deals with Isis worth a total of $2.5 billion.

"Our strategy is such that it puts in the hands of our partners exactly what they'd buy us for, new product opportunities," Crooke said. "And so we have a way of providing what's needed without an acquisition. And most people in the pharmaceutical industry understand that when they buy a company like Isis, they run it.


