Earning Analysis: Ionis Pharmaceuticals (IONS)

Notes:
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.

Last Tuesday, Ionis Pharma reported a operating loss of $0.47 per share on revenues of $38.47M for their second quarter results of 2016.  These results were slightly mixed from consensus, with analysts expecting a loss of 52 cents for earnings, on slightly higher revenues of $38.52M.  In addition, cash was at levels over $660M, without including over $85M recently received in this quarter.  Finally, guidance stated everything was well on target with their plans for the year, with expectations that they will see larger amounts of milestone payments in the back half of this year.  

Truthfully, that was the highlight of the conference call.  Everything else was mostly focused on the advancement of Nusinersen, which was information that was released the week prior to earnings.  With that, transition to Biogen is already starting to take place and Biogen is doing everything they can to advance this as fast as possible and encourage SMA analysis to be a part of prenatal screenings so they can catch instances of this disease as soon as possible.

It was reiterated that the most recent R&D day discussed the platelet count problems that put this stock and its holders in a bit of a stir.  It has been found through various safety databases and studies that the conditions themselves are known for platelet declines and since the discovery, monitoring and treatment has been proven successful.  Apparently programs continue to move forward and with the results for Nusinersen, I'm feeling much more confident in the future capabilities for the company's pipeline, though I am staying somewhat skeptical at this time.  At this point, it all boils down to how the upcoming Phase 3 results will shake out.  Since those won't be released until the first half of 2017, in all likelihood, we're back to seeing this stock meander and fall.  Since there are more milestone payments expected in the back half, I think those will be the shots in the arm to move the stock, as each milestone reached is just another indication that things are moving forward successfully - be it for anything from phase 1 to phase 3.  

In all, I'm feeling better about the stock.  I feel it is a buy, however, be careful as to when you decide to buy.  The stock is pulling back, as I anticipated it would.  I will say it's starting to get lower than I thought it might go, too, though.  Try to find some appropriate timing, but know if you wait too long all it will take is another payment to shoot the stock up 5 or 10 percent.  At this time, I don't have earnings or official price estimates.  The guidance the company has provided seems to be on track, and I believe next year we may see the company become profitable.  That's a pretty significant transition - especially if it is a steady state, rather than a one time occurrence, as I think is truly possible.  At this stage in the game, I'm finding it hard to believe the stock is going to get up to or above $42 in 2016.  I do see the low 50s possible for 2017 at this time, providing we don't get hit with more bad news.

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.