Morgan Joseph maintains “Buy” for ISIS Pharmaceuticals (NASDAQ:ISIS)

Morgan Joseph & Co. have reiterated their "Buy" rating for ISIS Pharmaceuticals, Inc. (NASDAQ: ISIS) and has target price for ISIS of $18, which is a premium of over 60% from its yesterday’s closing price of $11.12.

Yesterday, Isis Pharmaceuticals reported encouraging results with a cholesterol-lowering drug but also extended the timeline for getting it on the market. Moreover, the company said it cut cholesterol 25% in a study of patients with a rare genetic disorder that sends cholesterol levels sky-high.

But Yesterday, ISIS plunged over 17% after the company said it planned to seek approval for the drug nearly a year later than previously expected.

The firm has following views:

1. The company has a strong financial position with over $600 million in cash and a low cash burn. Isis Pharmaceuticals has been cash flow positive for several years despite being a development stage company.

2. There were several large pharmaceuticals interested in partnering Mipomersin when Genzyme inlicensed the drug in January 2008. If the stock lingers at current valuations, we would not be surprised if potential partners acquire Isis (possibly, along with Genzyme).