Followup: Speculating on Isis with APOCIIIRx Data this Weekend

Editor’s note: This trade was sent to PropThink Premium members on Friday, August 30. Purchased Sept 28 calls were good for more than 70% by the close on Wed, Sept. 4.

The top of Isis Pharmaceuticals’ (ISIS) previous gap held up in trading over the last two days, and the stock moved higher through the session on Thursday. Support at just over $24.00 suggests the stock isn’t breaking into the gap ahead of a weekend event – the release of Phase II data for APOCIIIRx as a monotherapy in patients with high triglycerides – and subsequent release to investors next Tuesday.

Recall that on June 23 Isis released the first Phase II data for ISIS-APOCIIIRx, its subcutaneous apolipoprotein C-III lowering therapy. In patients with high triglycerides and type 2 diabetes, APOCIIIRx effectively lowered apoC-III levels by 88% (mean), triglyceride levels by 72%, and raised high-density lipoprotein cholesterol (HDL-C) by 40%. In addition, patients showed trends toward enhanced insulin sensitivity, with improvements in measures of glucose control including HbA1c. The stock jumped from $21.99 to $28.42 and continued climbing to a high of $33.41 over the next three weeks.

Then on July 22, Isis released data from a Phase II study of APOCIIIRx in patients with high to severely high triglycerides on stable doses of fibrates.  In the study, patients treated with the higher of two doses of APOCIIIRx experienced a mean reduction in apolipoprotein C-III of 70%, 64% in triglycerides, and a mean increase in HDL-C of 52%.

This weekend at the European Society of Cardiology in Amsterdam (August 31), Isis will present results for APOCIIIRx as a monotherapy in patients with severely high triglycerides from the same Phase II program. Following, the company will host a conference call on Tuesday, Sept 3 (remember, markets are closed Monday for Labor Day) with details from the presentation. Data to date have been compelling, although all in very small patient populations (read our previous column).

Notice that in Thursday trading the stock broke out of its descending trend line. Sept $28 Calls are attractive at $0.95 with options expiry still three weeks out. Likewise, going long the stock may make sense. We owe a hat-tip to PropThink contributor Raj Patel for bringing the idea to our attention in a conversation on Thursday.