Feb 21 (Reuters) - Shares of Isis Pharmaceuticals reached a new high on Friday after the company said a mid-stage trial of its experimental treatment for a rare spinal disorder showed that it increased muscle function in children.

Isis is developing the drug, known as ISIS-SMN, in partnership with Biogen Idec. Isis is a leader in the development of "antisense" drugs, which aim to interfere at the genetic level to regulate formation of proteins.

Shares of Isis were up 15 percent at $58.82, while shares of Biogen were up 4 percent at $348.09 in afternoon trading on Nasdaq.

Isis said patients treated with the highest dose of the drug had an average 3.7-point increase in muscle function after nine months. In addition, a recently developed biomarker test showed increases in levels of a protein critical to health and survival of nerve cells in the spinal cord.

Spinal muscular atrophy, which affects around 35,000 patients in the United States, Europe and Japan, is caused by a loss of, or defect in, a gene associated with the survival motor neuron protein.

Isis said two trial patients experienced serious side effects, but they were not considered to be related to the drug.

"We do think these data support the bull case on the program although there are still questions on magnitude and safety at higher doses," UBS Securities analyst Matthew Roden said in a research note. "However, with no effective treatment for SMA (spinal muscular atrophy), the bar is low."

He said ISIS-SMN is not included in his earnings estimates for Isis, but noted that bullish analysts have estimated sales at $1 billion a year.

Isis said it plans to start a pivotal-stage trial of ISIS-SMN in children with spinal muscular atrophy later this year.