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Genzyme-Isis Deal Detailed

Details from an SEC filing reveal the licensing pact for mipomersen may not be overly pricey.

The licensing deal between




Isis Pharmaceuticals


announced on Monday may not be as pricey as it seemed.

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Isis surged earlier this week after announcing a partnership potentially worth $1.9 billion for its mipomersen, a late-stage drug for familial hypercholesterolemia (FH), a severe form of high cholesterol that affects about 1.5 million people in the U.S. and Europe. But according to a filing by Genzyme with the

Securities and Exchange Commission

Wednesday, much of the milestone payment portion of the deal is tied to development and commercialization of the drug beyond its initial indication.

"We no longer view this deal as hugely expensive, and expect Genzyme shares to trade up modestly once this information is disseminated widely," wrote Bear Stearns analysts in a note on the SEC filing Wednesday.

Of $825 million in development milestones outlined in the deal, $200 million are related to FH. The remaining amount is tied to further development of the drug for other indications and also approvals of a follow-on product.

Also, commercial milestones, which account for $725 million in potential payment to Isis, come into effect after the companies have achieved $3 billion or higher in peak sales, which may be unlikely with the first indication because of its limited patient population.

Genzyme and Isis will share mipomersen profits 50/50 when annual worldwide revenues reach $2 billion or more. The profit share begins with a 70/30 split for Genzyme and Isis, respectively, and reaches 50/50 on a sliding scale as annual revenues ramp up to $2 billion.

Isis fell back 82 cents, or 4.4%, to $17.76 on Wednesday, while Genzyme was trading up $1.88, or 2.4%, at $79.29.