Stock 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.

Yesterday, we heard a slew of news come from Ionis Pharmaceuticals, so I thought it might be worth taking a moment to look at the information and determine if it has an effect on the stock's performance or my thesis.  There were 3 major press events today.  First, this morning they announced the results from their COMPASS phase 3 study for Volanesorsen.  Then after the closing bell they announced the advancement into the pre-clinical phase of an unnamed cardiovascular disease treatment.  Finally, CEO Stanley Crooke appeared on CNBC's "Mad Money" to talk about his company and their announcements.  

First up is the Volanesorsen details.  It was good to see positive results come form this phase 3 study.  The focus for the drug is on key triglyceride diseases familial chylomicronemia syndrome (FCS) and familial partial lipodystrophy (FPL), both rare metabolic disorders.  Decreases in triglyceride levels was significant, with over 70% reductions on a mg/dcl basis.  This is only test 1 of a 4 part test, though and we have more to learn with some of the larger tests still in progress.  Positive news is encouraging, though, as no one with the rare diseases stopped the therapy due to complications.  Volanesorsen is preparing for distribution through Ionis' wholly owned subsidiary Akcea Theraputics, meaning they will fully reap the benefits of sales, but they also have to put up the money to get it to market.  

The second announcement was in relation to a new drug in the pipeline with AztraZeneca, focused on unnamed metabolic diseases.  Ionis was awarded $25M for reaching this particular milestone with another $300M potential of earnings for reached milestones and low double-digit royalty opportunities.  This is the first time using the antisense 2.5 chemistry with their LICA technology.  To me, the best part of this news at this stage is that the company continues to add more "shots on goal," or rather they add more potential therapies to their pipeline.  This is one of the reasons why I liked this stock as a speculative source because they have so many opportunities to have home runs that could allow me to reap huge profits.  While this particular announcment doesn't result in quick gains, it helps keep my thesis and reasoning intact.

Finally there's the appearance on Mad Money.  While a lot of the interview was a discussion on the recent announcements, there was some talk about the Spinraza drug to deal with Spinal Muscular Atrophy, which is partnered with Biogen.  According to Crooke, it sounds like we could see this drug getting through the FDA soon.  As excited as he seemed, that could mean somewhere in the January/February time frame.  When you consider analysts see this as a potential $2B franchise, according to low-end analyst guidance and then take 10% as the lowest possible double-digit percentage they can get from profit sharing, you might be looking at some decent earnings above expectations quickly next year.  In addition to this encouraging news, Dr. Crooke also took a little time to talk about their diabetes drug that is in their pipeline, IONIS-GCGRrx which is currently in phase two.  Again, gauging his enthusiasm in the discussion, it would seem that results are going well in this study as well and he mentioned there's a chance that the unblinding of the Phase 2 efforts could happen yet this year - meaning potentially another milestone payment and more progress in yet another therapy.

In short, it's hard to say Ionis had anything but a good news day.  It seems things are beginning to align for the company and 2017 has the potential to become a blowout year.  That said, don't get over enthused either.  We don't have a grip on what pricing implications may or may not be, the stock has had an incredible run since the end of October, and it's in a sector that's not as heavily favored right now.  The stock peaked around $70 earlier in 2015.  That price isn't out of the question in my mind as there seems to be even more going for it now than there was for them then.  That said, in a less favorable market to the industry, it will also take more to get it back up there too.  I'm not changing my estimates or targets just yet, but I think the news is setting me up to make adjustments.  Not to say the stock can't fall - it easily could get back into the low $40s at this time.  At the same time, there's a lot to look forward to here, too.

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.