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Ionis Pharmaceuticals Inc IONS

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Maintaining Our $62 Ionis FVE Following CF Termination; Antisense Technology Warrants Narrow Moat

Karen Andersen, CFA Sector Strategist

Analyst Note

| Karen Andersen, CFA |

Ionis reported $112 million in total revenue in the first quarter, and despite $60 million in Spinraza royalties from partner Biogen (in line with our estimates), the firm's research and development revenue, including milestone payments from partners, was lower than we had anticipated. We expect this revenue to pick up in the second half of the year, and we're not making any changes to our $62 fair value estimate. We are disappointed in the termination of clinical studies of Enac-2.5Rx in cystic fibrosis and look forward to more clarity on the preclinical safety signal and confirmation that future pulmonary programs will avoid this fate, as Ionis management expects. That said, we had not explicitly modeled Enac-2.5Rx or other pulmonary programs, and our fair value already incorporates the recent failure of Huntington's disease drug candidate tominersen in a pivotal trial. Despite these two disappointments, we think Ionis' broad pipeline still looks strong in rare neurological disorders and broader cardiology indications, supporting a narrow moat and extending cash flows beyond the firm's first blockbuster therapy Spinraza.  

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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).

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

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