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.

Yesterday Ionis Pharmaceuticals posted an update on its 2 Phase 3 studies regarding their anti-sense therapy for TTR.  In short, the FDA put a hold on the start of the study for the FCA version of the therapy (for heart-related TTR), which is being operated by Glaxo-Smith Klein (GSK), while the FAP version (for neurological-related TTR) continues on its normal path.  This news event caused the stock to go down over 13% at one point yesterday before it closed down over 10%.  Today it was down another 2%, presumably related to this news.  

Traditionally, an FDA hold is a bad thing for biotech companies as it indicates an issue in a test that needs to be addressed, and likely recalled.  In this case, the test hasn't even begun, though, indicating that this is more of a standard procedure to assure questions are answered assuring proper monitoring is put in place.  The FAP study provides some insights for the FDA on what to be looking out for and what to monitor in regards to potential issues.  As such, I'm sure more questions are being asked of GSK and Ionis regarding what has been seen to date, as patients with FCA are in worse health than those with FAP.

The other piece that I've seen being speculated is whether or not that this means there are problems or concerns with the FAP study.  The fact that the study continues, as planned, gives me confidence that we're not running into this problem, but it certainly opened up an angle for short sellers and speculators to jump on.  Add onto this the fact that the stock had moved almost 40% from its lows in mid-February to Wednesday, when the stock jumped up over 10%, and you have more than enough reason for people to run and wait for lower prices before the stock regains favor.

At this time, it will likely be a few months before the hold is lifted.  I'm guessing that things will move forward successfully and we are just dealing with a scare amidst a perfect time to take profits and trade another day.  My thesis on the company and its long term prospects are not hurt by this news, though it is news that will need to be watched.  As with any drug company, if a therapy becomes a failure, the stock will suffer mightily for awhile.  Don't take this event with a grain of salt, but don't panic over it yet either.  Cooler heads will prevail.

Nothing on this site should be taken as advice, research, or an invitation to buy or sell any securities.  All views expressed are solely of my own and I am not a professional money manager.  Please consult with your financial adviser before taking any action in your own portfolio.