2023-04-08 06:12:19 ET
Summary
- Ionis has several revenue-generating therapies and two with pending PDUFA dates.
- Its phase 3 pipeline boasts five molecules with a sixth expected soon.
- An alluring business model is falling short for shareholders.
- A toxic mix of rising expenses supported with decreasing revenues awaits Ionis in 2023.
Ionis (IONS) is a long term favorite of mine that is going through a rough patch. Its jumbo sized expenses are growing faster than its revenues. It's not all doom and gloom, but it is unfortunate to find a mature biotech with a $5+ billion market in such straits.
Ionis has several approved therapies and two pending PDUFA's.
Ionis' 2022 10-K ("10-K") published 02/22/2022 lists its currently approved therapies as:
- SPINRAZA, partnered with Biogen (BIIB) responsible for commercializing SPINRAZA worldwide, is the global market leader in treatment of spinal muscular atrophy [SMA]; through December 31, 2022 Ionis has earned more than $1.8 billion in revenues from SPINRAZA collaboration, including more than $1.4 billion in SPINRAZA royalties;
- TEGSEDI, a once weekly, self-administered subcutaneous medicine approved in the U.S., Europe, Canada and Brazil for the treatment of patients with ATTRvPN. Ionis launched TEGSEDI in the U.S. and the EU in late 2018; in 2021, selling TEGSEDI ex-US through distribution agreements;
- WAYLIVRA, launched in the EU in the third quarter of 2019, is a once weekly, self-administered, subcutaneous medicine that received conditional marketing authorization in 06/2019 from the European Commission, or EC, as an adjunct to diet in adult patients with genetically confirmed familial chylomicronemia syndrome, or FCS, and at high risk for pancreatitis; in 2021, selling WAYLIVRA ex-US through distribution agreements;
In 07/2022, the FDA awarded Ionis' tofersen, being developed by Biogen, priority review with a PDUFA date of 01/25/2023. The FDA extended its review date by three months to 04/25/2023. The NDA is evaluating tofersen for superoxide dismutase 1 (SOD1) amyotrophic lateral sclerosis [ALS]. SOD1 ALS is a rare genetic form of ALS.
As I pointed out in my last Ionis article any SOD1 ALS review will likely have smallish impact on Ionis finances. A favorable decision will nonetheless help to validate Ionis' therapeutic credibility after a nasty string of setbacks in recent years. I am not overly optimistic on tofersen's prospects.
The FDA advisory panel reviewing Biogen's application was nuanced. It voted against its effectiveness. The panel did however vote :
...unanimously that the drug could have a clinical benefit in reducing a protein that is associated with disease severity.
This is another case of Biogen post hoc data parsing, a practice that introduces considerable skepticism .
Ionis' second pending PDUFA is for another partnered asset, eplontersen (IONIS-TTR-L RX ). The eplontersen NDA is for treatment of hereditary transthyretin-mediated amyloid polyneuropathy (ATTRv-PN).
Ionis dealt it to AstraZeneca ( AZN ) back in 12/2021. Its PDUFA is 12/2023. On 03/24/2023, Ionis and AstraZeneca reported positive top-line results from its 66 week trial consistent with the results from its positive 35-week findings announced in 06/2022.
As a partnered therapy in a complex market environment the revenue impact of an eplontersen approval is unsure. It will need several quarters post launch to take shape, perhaps in mid-2024.
Ionis has five additional molecules in phase 3 development, with a sixth on the way.
Ionis' 10-K includes the following graphic with its late stage pipeline (p. 8):
Beyond its two undergoing FDA review, the remaining five, with comments from Ionis Q4, 2022 earnings call (the "Call"), its 10-K, and cited releases are:
- olezarsen - during the Call Ionis chief global strategy and operations officer Cadoret characterized olezarsen in treatment of familial chylomicronemia syndrome ((FCS)) as its inaugural independent launch;
- donidalorsen - expected to launch next in line, is also being developed independently;
- ION363 - Ionis is developing this third phase 3 molecule in treatment of a different flavor of ALS with mutations of the fused in sarcoma gene, or FUS, with an estimated 350 patients with FUS-ALS in G7 countries; this will be a challenging drug to develop;
- pelacarsen (IONIS-APO(a)-L Rx ,) - licensed to Novartis in 2019, topline data in pivotal outcomes trial of 8,325 patients expected in 2025;
- bepirovirsen (formerly IONIS-HBV Rx ) - being developed by GlaxoSmithKline ( GSK ) under an 08/2019 collaborative development and licensing agreement.
In addition to those listed above, Ionis' FY 2022 Financial Results and Business Update presentation (the " Presentation ") calls out a sixth. Its slide 10, under the heading "Key Value Driving Events in 2023" includes a panel citing a phase 3 trial initiation for IONIS-FB-LR for IgA nephropathy.
This drug was designed to inhibit the production of complement factor B, or FB, and the alternative complement pathway.
Ionis' financial business model has yet to produce ongoing earnings for shareholders.
In 11/2018's "Ionis: Built To Last ", I touted its long term strategy of building cash through serial deal making. Over the years it has maintained a fat purse of $2 billion+ by developing drugs and monetizing them with an assortment of collaborations and partnerships. It rakes in hefty out-front fees along with ongoing milestones and royalties.
Unfortunately its strategy has yet to generate a lasting pattern of earnings. Its ample liquidity is comforting but insufficient. Successful companies grow net income, not just cash.
Ionis' 10-K reads much like that of far smaller companies that have enjoyed nowhere near its therapeutic successes over the years. It notes (p. 52):
...our expenses have generally exceeded our revenue since we were founded in January 1989. As of December 31, 2022, we had an accumulated deficit of approximately $1.4 billion...
Its shares reflect this unfortunate dynamic as shown by the chart below:
Poised for near term underperformance bullish Ionis investors look for better things in 2024.
An optimist can get excited about upcoming approvals followed by a nice tail of phase 3 molecules. Shouldn't Ionis stock turn around and start heading up soon? Before deciding, take a quick look at Presentation slides 17 with 2022 results compared to slide 18 with its 2023 guidance:
In 2023 Ionis projects a minor decrease in revenues from $587 million in 2022 to $575 million guided for 2023. Expenses on the other hand are slated for a hefty increase of nearly 10% from $898 million in 2022 to guided midpoint of $982.5 million in 2023.
What will 2024 bring? Bulls hope that it will include major revenue contributions from tofersen and eplontersen approvals. I am dubitante. In the first place they have to garner FDA approval; this seems more of a hurdle for tofersen than it does for eplontersen.
In the second place they are partnered assets in smallish indications per Presentation slide 8. If tofersen is approved Biomgen will likely go all out as it has for SPINRAZA. As for eplontersen, time will tell how AstraZeneca approaches it. Its latest earnings call includes no mention of it.
Conclusion
As a long suffering Ionis shareholder, it pains me to observe that there is no compelling reason to anticipate any near term shift in its trajectory. I rate Ionis as a Hold.
For further details see:
Ionis: Late Stage Trials Bump Expenses - Revenues Lag