Biogen, Isis Enter Collaboration On Spinal Atrophy Treatment

Isis Pharmaceuticals, Inc. (ISIS) entered a collaboration agreement with Biogen Idec Inc. (BIIB) with a potential value of $299 million to develop and commercialize the drug developer's investigational treatment for spinal muscular atrophy.

Isis's experimental treatment is designed to compensate for an underlying genetic defect that causes the potentially fatal neuromuscular disease, which is characterized by muscle atrophy and weakness.

Under the agreement, Isis will receive an upfront payment of $29 million. The company is eligible to receive up to $45 million in milestone payments prior to any licensing. Biogen has the option to license the treatment, ISIS-SMN, until the completion of the first successful Phase 2/3 trial. Isis also could receive up to an additional $225 million in a license fee and regulatory milestone payments as well as double digit royalties on any sales.

"SMA is a heartbreaking disease--it can kill children before their 2nd birthday and there are currently no therapies to treat the disease," said Biogen Chief Executive George A. Scangos.

Biogen derives the bulk of its sales from drugs to treat the chronic, inflammatory and potentially disabling disease. Scangos, who became CEO in mid-2010, has led a restructuring effort at Biogen that cut costs and refocused the company around developing neurology treatments as well as its current MS drugs.

Isis began a Phase I clinical study of ISIS-SMN for children with the disease in December. The U.S. Food and Drug Administration has granted orphan status and fast-track designation to the treatment.

Biogen in October reported that its third-quarter earnings rose 38%, topping expectations as the biotechnology company's key drugs for treating multiple sclerosis fueled rising sales.

Shares of Isis and Biogen closed Tuesday at $7.25 and $113.50, respectively. Neither stock was active in premarket trading. Isis's stock is down 30% in the past year, while Biogen has climbed roughly 71%.

   -By Tess Stynes, Dow Jones Newswires; 212-416-2481; [e-mail]