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Top Picks 2020- Ionis Pharmaceuticals IONS

·3 mins read

The R&D pipeline at Ionis Pharmaceuticals (IONS) is unsurpassed, we believe, by most leading biotech and even global drug companies, suggests biotech expert Jay Silverman, contributing editor to The Medical Technology Stock Letter.

With 2019 sales of its leading blockbuster drug — SPINRAZA — for treating SMA (spinal muscular atrophy) expected to exceed $2 billion for its partner Biogen (BIIB), Ionis' emergence as a top-tier biopharmaceutical company is becoming obvious.

See also: Top Picks 2020: Horizon Therapeutics (HZNP) and Qorvo (QRVO)

With more than 40 clinical trials underway and over $2 billion in cash on the balance sheet, in our view, 2020 will be the year that Ionis is further recognized not only for its antisense dominance, but also for the sustainable growth that the pipeline, the company’s multiple partners and IONS itself is demonstrating.

Sometimes IONS gets chastised for “only” getting upfront and royalty payments, but what investors are just beginning to realize is how financial fruitful those deals can be (e.g., the Spinraza deal) while relying on the multinational partners marketing power to maximize sales.

SPINRAZA generated over $1.5 billion in worldwide net sales through Q3:19, an increase of nearly 25% Y/Y and we forecast ~$2 billion in full year sales. The total number of patients on SPINRAZA treatment is now more than 9,300 patients worldwide.

While young children make up the majority of use, adult patients are now a significant driver of growth and as the largest SMA patient segment. Additionally, the global opportunity for SPINRAZA appears to be larger than initial estimates, with more than 45,000 patients in markets where Biogen (BIIB) has a direct presence.

See also: Top Picks 2020: Paycom Software (PAYC)

While Zolgensma — an SMA gene therapy from Novartis (NVS) — is new to the market and some competition is expected, BIIB/IONS first to market, longer term data and even next-generation compounds, we believe, will help sustain growth and leadership in this big field.

Last October, Pfizer (PFE) — along with Ionis and Akcea Therapeutics (AKCA) — formed a worldwide agreement for an investigational antisense therapy being developed to treat patients with certain cardiovascular and metabolic diseases. Pfizer is responsible for all development and regulatory activities and costs beyond those associated with the ongoing Phase II study. 

AKCEA-ANGPTL3-LRx is currently being evaluated in a Phase II trial in patients with Type 2 diabetes, hypertriglyceridemia and non-alcoholic fatty liver disease (NAFLD). This is yet another excellent IONS deal and is further testament to IONS’ Lica technology which allows for significantly less drug to be used.

Also, in October, IONS’ partner Roche increased the size of RG6042 Phase III trial in Huntington's disease from 660 patients to 801, delaying the data release from the end of 2019 until 2020.  

And in December, IONS announced another partnership with Biogen for an antisense therapy designed to selectively reduce production of microtubule-associated protein tau (MAPT), or tau, in the central nervous system. MAPT is believed to contribute to or cause several neurodegenerative diseases, including Alzheimer's disease.

With four Phase III compounds about to be reported on plus a myriad of exciting Phase II programs in sizable markets (Parkinson’s, Alzheimer’s Huntington’s HBV etc.), we believe 2020 will the best best year yet for IONS and its shareholders.

While the stock remains well below its 2019 highs due to what we believe is overdone concerns of Spinraza competition, the company has embarked upon its first stock buyback program ($125 million to start) with its abundant and growing cash hoard. IONS is a buy under $75 with a target price of $90.

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