Ionis pharmaceuticals the pinnacle of rna therapeutic innovation – ionis pharmaceuticals, inc. (nasdaq ions) seeking alpha gas after eating


Such a study indicates that the greatest investment reward comes to those who by good luck or good sense find the occasional company that over the years can grow in sales and profits far more than the industry as a whole. It further shows that when we believe we have found such a company we had better stick with it for a long period of time. It gives us a strong hint that such companies need not necessarily be young and small. Instead, regardless of size, what really counts is a management having both a determination to attain further important growth and an ability to bring its plans to completion. – The Father of Growth Investing (Philip Fisher)

With Dr. Scott Gottlieb (the FDA Commissioner) leading the ship, waves of therapeutic innovation are delivering newfound hopes for countless patients. Investors have also been amassing substantial wealth. Back in Dec. 2017, we witnessed the first approval of gene therapy, Luxturna of Sparks Therapeutics (NASDAQ: ONCE) that restored sight to a rare retinal form of blindness. Earlier that year, the stellar cancer management with Yescarta of Gilead Sciences (NASDAQ: GILD) and Kymriah of Novartis (NYSE: NVS) were also approved. Though interference ribonucleic acid (RNAi) – a novel and highly promising method of treating diseases by blocking the rogue protein at the level of RNA rather than the said enzyme downstream – was approved in late 2016, it’s starting to gain market traction. Besides Alnylam Pharmaceuticals (NASDAQ: ALNY), Ionis Pharmaceuticals (NASDAQ: IONS) is also a leading innovator in this space. Ionis’ partner Biogen (NASDAQ: BIIB) successfully launched nusinersen (Spinraza) for the treatment of spinal muscular dystrophy (“SMA”). Interesting, the stock traded mostly on a downtrend regardless of its increasing intrinsic value (or true worth). Be that as it may, the situation is changing rather rapidly. As follows, the stock enjoyed +10% gains for the two weeks prior to close the Friday session at $45.06. In this report, we’ll discuss the improving fundamentals of Ionis and what investors can expect from this strong $5.7B capitalized company.

DNA (the genetic materials coding for various genes) are transcribed into messenger RNA (mRNA) strips. These transcripts are then translated into proteins. As macromolecules, proteins are cellular enzymes responsible for various bodily processes. And, the aberrant proteins can manifest as specific diseases. For instance, the condition ( hereditary amyloidosis) arises from certain DNA mutations, thereby leading to the abnormal protein synthesis. As these dysfunctional enzymes are deposited in tissues, they disrupt normal physiology. Of note, the most common type of hereditary amyloidosis is transthyretin amyloidosis(“ATTR”), a condition in which the transthyretin protein deposits are mostly in the liver.

Per figure 3, the key difference between Alnylam technology and Ionis is that the latter focuses on using antisense RNA suppression. By disrupting the mRNA, the rogue protein production is halted upstream to prevent the disease. Of note, RNAi is a powerful and clinically validated approach for the treatment of a wide range of debilitating diseases. And, it can transform the lives of patients who have limited or inadequate treatment options. From the investing perspective, RNAi is highly lucrative as it has recurring revenues because the drug does not consummate its market.

For fiscal 2017, Ionis procured $508M revenues, a 46% improvement from the $347M from 2016. The company also reported $17.3M ($0.08 per share) net loss versus the $86.6M ($0.72 per share) declined in the year prior. Looking at the balance sheet, there were $1B in cash and investments (as of Dec 31. 2017), thereby signifying a 50% increase compared to the $665M for the similar period. Based on the metrics above, there should be adequate cash to fund operations for another year and a half (prior to additional financing).

The most notable catalysts are the upcoming approval and launch of two stellar RNAis (Inotersen for hATTR and Volanesorsen for FCS and FPL). There is a good chance it they will get approved and to generate blockbuster sales. Commenting on the recent developments, Dr. Stanley T. Crooke (Chairman and CEO) enthused,

In 2017, our accomplishments were remarkable. The historic launch of Spinraza and the acceptance of our regulatory filings for inotersen and volanesorsen, which set up potential launches of these two drugs in 2018, combined with our strong financial performance, demonstrate our ability to execute across all areas of our business. We also advanced our pipeline of novel drugs with positive data readouts from 11 clinical studies, including five with our LICA drugs, and introduced eight new drugs to the pipeline, further highlighting the broad capabilities and potential of our antisense technology platform. Looking ahead, we believe 2018 could be an important turning point for Ionis. Most important will be the launch of inotersen and volanesorsen, if approved. We also expect to report data from at least six Phase 2 studies, initiate at least five Phase 2 programs and report data from multiple proof-of-concept clinical studies. Final Remarks

As one of the leading innovators of RNAi (a novel and highly promising therapeutic class), Ionis is powering by one approved medicine thus far: the stellar drug is well on its way to procuring blockbuster sales. Two potential blockbusters have highly favorable chances of procuring over a billion revenues each. Their launches will commence shortly post-approval sometimes later this year. And, investing at this stage of growth tends to yield to best risks versus profits profile. Of note, Ionis risks are significantly deleveraged for the company already successfully launched Spinraza. In addition, the robust outcomes of the multiple phase 3 (NEURO-TTR and APPROACH) trials as well as other early-stage studies are evidence that Ionis’ technology works. Hence, a negative data reporting from Ionis won’t be binary (as it would be for other smaller companies).

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