Stock Analysis: Ionis Pharmaceuticals (IONS)

Stock Ratings: 1 = buy at current stock prices, 2 = buy on a 5-10% dip in stock price, 3 = sell on a 5-10% increase in stock price, 4 = sell at current stock prices to raise cash.  Ratings are based upon 12-18 month outlook on stock direction and not necessarily related to moves I make due to financial positioning.

I wanted to take a few minutes to provide an update after today's trading market results for Ionis Pharmaceuticals, which fell a whopping 11.76%, though that was well off it's lows of over 15% down.  I spent free time today trying to understand what was going on.  No news was distributed, but all of Biotech was taking a hit in the 2% - 5% range, with the IBB pushing down near it's August 24 lows.  It wasn't until after the close that news releases started to come out and help shed light on what else was pushing things down.  As a part of their discussion at the JP Morgan healthcare conference, Ionis provided an update on their 2015 outlook and some additional information. 

The financial update really didn't have any earth shattering information in it.  Instead of cash reserves over $750M, they now expect cash reserves of over $775.  That's certainly decent progress.  They also still expect a net operating loss (NOL)  in the low $20M range.  This falls well in-line with what I recall them saying in their third quarter conference call, though maybe slightly better than expected.  In the rough market we've been experiencing, there wasn't anything that would really push the stock upwards.

However, we did get news that could easily be portrayed as "bad."  Today Ionis announced that they have terminated their license agreement with Sanofi Genzyme for their approved drug Kynamro and they have no intentions on pursuing the sale of the drug on their own.  Genzyme, who was later purchased by Sanofi, wasn't doing a lot to push for sales of the drug, which had been anemic.  In the end, Ionis decided to break the contract and take the rights to the drug back.  They don't have to pay a penalty for doing this and they keep the drug.  It does seem they have some drugs in the pipeline that might do better than this one, however, only time will tell.  I suspect that Ionis is looking for someone else to show interest in partnering to sell the drug.  In all, Kynamro sales have been weak for a while now.  While there won't be new sales, the drug will continue to go to those who are on it, from what I understand.  In the end, this seems more of a matter of just moving on from something that wasn't working out well.  They'll either find a better partner, or leverage a better therapy they expect to be out soon.

Finally, they also posted some positive results in their phase 2 testing of their child spinal muscular atrophy drug - a complication that typically results in a child's death by the age of two witnessed no deaths in 2015.  This is upbeat, and rather unprecedented at this point.  Given it's only phase 2, there's much more to go yet.

At the end of the day, I don't see enough to send the stock down as far as it went - potentially a reason why it closed well off of its lows.  I would like to see the stock get hit hard again to buy some more, but will have to see how it works out.  At this point, I reiterate my ranking of a 2 and have no changes to previously communicated expectations.