Ionis Pharmaceuticals, Inc.: Initiation of Research Coverage

Thursday, November 14, 2019

William Blair initiated research coverage of Ionis Pharmaceuticals, Inc. (IONS $56.98). Ionis is the leader in antisense oligonucleotide (ASO) therapies led by the blockbuster Spinraza, marketed by Biogen, for the treatment of spinal muscular atrophy (SMA), and recently launched Tegsedi and Waylivra.

Analyst Myles Minter expects Ionis to generate revenue of $1.046 billion in 2019 and $849 million in 2020. He estimates the company will be GAAP profitable beyond 2019 but noted that this is reliant on at least one licensing deal and/or multiple milestone payments from ongoing collaborations and agreements.

Minter said, "Three commercial-stage assets—Spinraza, Tegsedi, and Waylivra—and over 30 pipeline opportunities have built Ionis into the premier ASO company. Although out-licensing limits the potential revenues to milestones and royalties, we see it as an effective way to focus on what Ionis does best: developing ASO therapies from the preclinical stage to clinical proof-of-concept. While Spinraza has revolutionized the treatment of SMA, we see headwinds to the long-term growth potential of the franchise. We anticipate the recent approval of Novartis's Zolgensma, an SMA gene therapy, will erode Spinraza's market share of new-start type-1 SMA patients, but more concerning is the potential 2020 U.S. approval of Roche's risdiplam, in collaboration with PTC Therapeutics, which could erode Spinraza's total market share of type-2/3 patients given a more favorable oral route of delivery. For Tegsedi in hereditary transthyretin amyloidosis with polyneuropathy, we see significant competition from Alnylam's Onpattro, which, although intravenous, does not carry an FDA black-box safety warning, and Pfizer's recent U.S. approval of Vyndaqel may also pose a commercial risk. We look to IONIS-HTTRx in collaboration with Roche-Genentech as the major value driver from the pipeline; it could boast $8.5 billion in peak sales as potentially the first disease-modifying therapy for Huntington's disease, with Phase III GENERATION-HD1 trial top-line data expected in 2021."

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