How Mighty Is Isis?

Is It Safe?

The answer to that is not so simple, although you wouldn't know it from listening to the company or sell-side analysts. In Isis' press release, it stated the drug demonstrated a strong safety profile and was well tolerated.

But one area investors should keep a close eye on is liver toxicity. The threshold of liver function that is usually cited during the testing of drugs is three times the upper limit of normal (ULN) of the enzyme ALT. Drug companies don't want to see their test subjects go above three times ULN. Of the 40 patients who received the drug, two experienced greater than three times ULN, while eight fell into the two-to-three-times ULN category.

Isis CEO Dr. Stanley Crooke stresses that readings were taken on a weekly basis (vs. monthly in other studies) and that it's more important to look at the figures compared with the numbers of readings (roughly 1,100) vs. the number of patients. He adds, "If you take the average person off the street and run liver enzymes on them weekly, over a period of three months, you will find multiple times when their liver enzymes might be up."

The Street seems to buy into this line of reasoning. However, not everyone is taking the numbers at face value. One hedge fund manager who is short Isis and requested anonymity counters the CEO's argument, stating, "The incidence of ULN readings increases significantly at higher doses, which is evidence that suggests a drug effect."

He says it's important to note that liver toxicity is a cumulative effect, and that is why he's particularly interested in the two-to-three-times ULN numbers, considering that the trials were short -- five weeks and three months of dosing.

Comparatively, phase III trials for cholesterol fighters such as Bristol-Myers Squibb's (BMY - commentary - Cramer's Take) Pravachol, Merck's (MRK - commentary - Cramer's Take) Zocor and Pfizer's (PFE - commentary - Cramer's Take) Lipitor involved thousands of patients over a longer time period. Since high cholesterol is a chronic condition, the money manager is concerned that with readings already in the two-to-three-times ULN category after such a short time, more patients may cross the threshold with continuous use of ISIS 301012.

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In keeping with TSC's editorial policy, Lichtenfeld doesn't own or short individual stocks. He also doesn't invest in hedge funds or other private investment partnerships.

Marc Lichtenfeld was previously an analyst at Avalon Research Group and The Weiss Group and a trader at Carlin Equities. He holds NASD 86, 87, 7 and 63 licenses. His prior journalism experience includes being a reporter/anchor for On24 in San Francisco and a managing editor of InvestorsObserver, a personal finance Web site. He is a graduate of the State University of New York at Albany. He appreciates your feedback; click here to send him an email.