Stock Analysis: Ionis Pharmaceuticals (IONS)
I wanted to provide a quick update after yesterdays chilling move in the stock of Ionis Pharmaceuticals. The stock, which was down over 11% at one point during the day, closed down just over 8%. There weren't any announcements from the company, its newest subsidiary Akcea (yeah, I have some catching up to provide here), or the FDA. The cause for the swoon were the explosive earnings results that came out of Biogen Idec, which Ionis partnered with on the creation of the SMA therapy Spinraza. Analyst expectations for sale of the drug were at $70M for the quarter, but the real results were almost three times that, coming in at $203M. The partnership deal between Biogen and Ionis provides a royalty fee of between 11 and 13 percent of those revenues, meaning that we can expect the company to announce income between $22M and $26M for this one therapy alone - much more than was expected for the quarterly results. The stock surged in the pre-market hours to open at $63, only to crash from that point forward.
In short, yes, I'm telling you that the stock dropped 8% because of great pre-earnings details. It wasn't until later in the day when an analyst provided an upgrade of Ionis that the selling pressure let up to take us from over 10% down. Putting a little further thought, research and story to this, though, and it's a little more understandable. When the stock opened at $63, it was up over 32% over last 3 months. That's a significant jump in stock price and there certainly were people who felt they had no choice but to "sell the news." This protected their gains. Prudent practices, but not one I was interested in following as my time horizon is longer. There were also some fears about the drug just peaking faster than expected, but the gains are limited and won't last. Maybe there's some truth to this too. There are only so many kids with SMA. That's where my thesis on the company comes into play though. This company has many shots on goal. Their spun off subsidiary, Akcea, is working to launch Volanesorsen, and there are many others coming down the line.
In my time owning the stock, it seems like people have been quick to short it after it reached it's all time high two summers ago. I don't know what the short interest is on the stock right now, but it's also possible we saw that increase yesterday, as people try to predict that Ionis has nothing left in the tank to take them higher. At this point, I feel the success of Spinraza only helps support the effectiveness of the platform and provides a reason to believe there will be other successes in the pipeline. For now, I believe the company is going to exceed expectations, partly because people are struggling to believe the current success. With all things said, the stock cooled itself off, but still has strong prospects. I don't think we'll hear anything different out of the company when they announce next week, but that is what we should focus on and react to next.
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.
In short, yes, I'm telling you that the stock dropped 8% because of great pre-earnings details. It wasn't until later in the day when an analyst provided an upgrade of Ionis that the selling pressure let up to take us from over 10% down. Putting a little further thought, research and story to this, though, and it's a little more understandable. When the stock opened at $63, it was up over 32% over last 3 months. That's a significant jump in stock price and there certainly were people who felt they had no choice but to "sell the news." This protected their gains. Prudent practices, but not one I was interested in following as my time horizon is longer. There were also some fears about the drug just peaking faster than expected, but the gains are limited and won't last. Maybe there's some truth to this too. There are only so many kids with SMA. That's where my thesis on the company comes into play though. This company has many shots on goal. Their spun off subsidiary, Akcea, is working to launch Volanesorsen, and there are many others coming down the line.
In my time owning the stock, it seems like people have been quick to short it after it reached it's all time high two summers ago. I don't know what the short interest is on the stock right now, but it's also possible we saw that increase yesterday, as people try to predict that Ionis has nothing left in the tank to take them higher. At this point, I feel the success of Spinraza only helps support the effectiveness of the platform and provides a reason to believe there will be other successes in the pipeline. For now, I believe the company is going to exceed expectations, partly because people are struggling to believe the current success. With all things said, the stock cooled itself off, but still has strong prospects. I don't think we'll hear anything different out of the company when they announce next week, but that is what we should focus on and react to next.
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.
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.
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