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.