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Ionis Pharmaceuticals Inc IONS

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Maintaining Our $62 FVE and 2021 Forecast for Ionis; Data Catalysts Ramping Up in 2022

Karen Andersen, CFA Sector Strategist

Analyst Note

| Karen Andersen, CFA |

Ionis Pharmaceuticals reported $133 million in revenue and a $48 million non-GAAP net loss in the third quarter, lower than we had expected, as Spinraza royalties from partner Biogen and smaller milestone payments from collaborators failed to counter rising operating expenses. That said, Ionis is still on track to meet its guidance for more than $600 million in revenue this year, with higher revenue expected in the fourth quarter, and we're maintaining our $62 fair value estimate. Research and development expenses grew substantially in the quarter as Ionis moves more wholly owned programs into late-stage trials and continues to supplement its antisense technology with licensing agreements. While a reorganization following the Akcea acquisition has brought selling, general, and administrative expenses under control, we expect R&D to move higher in the fourth quarter, particularly as the firm begins phase 3 trials for hereditary angioedema drug donidalorsen (2024 data). As we discussed in our Oct. 18 note, the key phase 3 trial of amyotrophic lateral sclerosis drug tofersen failed to meet its primary endpoint, although signs of reduced disease progression (and the recently initiated presymptomatic Atlas trial) could mean that the program still has a chance at moving forward, and we're maintaining our 40% probability-weighted forecast for the drug (roughly $50 million in annual royalty revenue in our model by 2030). Ionis now has multiple programs in phase 3 and a validated platform (with the success of spinal muscular atrophy drug Spinraza) to support its narrow moat.

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Company Profile

Business Description

Ionis Pharmaceuticals is the leading developer of antisense technology to discover and develop novel drugs. Its broad clinical and preclinical pipeline targets a wide variety of diseases, with an emphasis on cardiovascular, metabolic, neurological, and rare diseases. Ionis and partner Biogen brought Spinraza to market in 2016 as a treatment for a rare neuromuscular disorder, spinal muscular atrophy. Ionis subsequently brought two additional drugs to market via its cardiovascular-focused subsidiary Akcea, including ATTR amyloidosis drug Tegsedi (2018) and cardiology drug Waylivra (Europe, 2019).

2855 Gazelle Court
Carlsbad, CA, 92010
T +1 760 931-9200
Sector Healthcare
Industry Biotechnology
Most Recent Earnings Sep 30, 2021
Fiscal Year End Dec 31, 2020
Stock Type Distressed
Employees 757