Why Is Ionis Pharmaceuticals (IONS) Up 1.4% Since Last Earnings Report?
A month has gone by since the last earnings report for Ionis Pharmaceuticals (IONS). Shares have added about 1.4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Ionis Pharmaceuticals due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Q2 Earnings & Sales Beat Estimates
Ionis reported a loss of 60 cents per share for second-quarter 2023, which was much narrower than the Zacks Consensus Estimate of a loss of 94 cents. In the year-ago, the company posted a loss of 74 cents per share.
The bottom line includes compensation expense related to equity awards. Excluding these special items, the adjusted loss per share was 41 cents per share versus loss of 56 cents per share in the year-ago quarter.
Total revenues were $188 million in the second quarter, which significantly beat the Zacks Consensus Estimate of $136.8 million. Revenues rose 40% year over year due to higher payments from partnered programs.
Quarter in Detail
Ionis earns commercial revenues, primarily royalty payments on net sales of Spinraza and R&D revenues from partnered medicines.
Commercial revenues were $78 million in the second quarter, flat year over year. Commercial revenues beat our model estimate of $75.1 million as well as the Zacks Consensus Estimate of $74 million.
Commercial revenues from Spinraza royalties were $61 million, up 1.6% year over. Spinraza product sales (recorded by Biogen) were flat in the quarter, being partly hurt by competitive pressure. Spinraza royalties fell shy of our model estimate of $61.4 million but beat the Zacks Consensus Estimate of $60 million.
Revenues from Tegsedi and Waylivra from distribution fees were $11 million compared with $10 million in the year-ago quarter. License and royalty revenues were $6 million in the quarter compared with $8 million in the year-ago quarter. The commercial revenues included royalty revenues from Biogen for Qalsody/tofersen, which was approved by the FDA in April for treating SOD1-ALS.
R&D revenues almost doubled to $110 million from the year-ago revenues of $56 million due to rapid advancement in numerous partnered programs. The R&D revenues in the quarter included a $40 million payment from AstraZeneca (including $20 million for costs shared for eplontersen development) and a $16 million milestone payment from Biogen for Qalsody U.S. approval.
Adjusted operating costs were up 29.2% year over year to $252 million in the quarter, mainly due to higher R&D costs, as the company rapidly advanced its wholly-owned late-stage pipeline and increased go-to-market activities for eplontersen, olezarsen and donidalorsen.
2023 Guidance
Ionis reaffirmed its previously issued financial guidance for 2023. The company expects total revenues to be more than $575 million in 2023. Its adjusted operating loss is expected to be less than $425 million.
Adjusted operating expense is expected to be in the range of $970-$995 million. Adjusted operating costs are expected to gradually increase in the second half. R&D costs are expected to increase in the range of 20-25% year over year in 2023. SG&A costs are expected to increase approximately $35 million year over year.
The company expects its cash and investment to be approximately $2 billion in 2023.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
VGM Scores
Currently, Ionis Pharmaceuticals has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Charting a somewhat similar path, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Ionis Pharmaceuticals has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Ionis Pharmaceuticals belongs to the Zacks Medical - Drugs industry. Another stock from the same industry, Corcept Therapeutics (CORT), has gained 8% over the past month. More than a month has passed since the company reported results for the quarter ended June 2023.
Corcept reported revenues of $117.72 million in the last reported quarter, representing a year-over-year change of +13.9%. EPS of $0.25 for the same period compares with $0.24 a year ago.
Corcept is expected to post earnings of $0.20 per share for the current quarter, representing a year-over-year change of -33.3%. Over the last 30 days, the Zacks Consensus Estimate has changed +1%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #2 (Buy) for Corcept. Also, the stock has a VGM Score of D.
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