Why Ionis Pharma Is Rocketing 25% Higher Today

By Markets Fool.com

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What happened

After updating investors on its third-quarter performance this morning, and in the wake of the U.S. presidential election, shares in Ionis Pharmaceuticals (NASDAQ: IONS) are soaring 25% higher at 1:30 p.m. EST.

So what

Ionis Pharma boasts one of the largest clinical-stage pipelines in biotechnology, and recently, the company's shares have benefited from positive trial results for nusinersen, a therapy that could win FDA approval next year for use in patients diagnosed with spinal muscular atrophy, or SMA.

In Ionis Pharma's third-quarter earnings release, management provided an update on nusinersen and its other pipeline programs. It also reported Ionis Pharma's third-quarter revenue of $110.9 million jumped 126% from a year ago, and that the company's net income improved to a gain of $7.4 million from a loss of $35.8 million in the comparable quarter last year.

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The company's top-line growth was mostly thanks to $96.9 million in licensing fees paid by Biogen (NASDAQ: BIIB)that's related to nusinersen's development. Biogen has a license to market nusinersen worldwide. Ionis Pharma also recorded revenue from Kastle Therapeutics ($15 million) and J&J's (NYSE: JNJ) Janssen ($10 million).Thanks to its licensing revenue, Ionis Pharma's cash stockpile ended September at$687.8 million.

Ionis Pharma's update comes alongside a broad-based rally in biotechnology shares following the election of Donald Trump as the next U.S. president. On the campaign trail, Trump appeared more amenable to the industry than his competitor.

Now what

Biogen has already filed with both the FDA and European regulators for approval of nusinersen. The FDA has accepted the application under an accelerated pathway, which means a decision could come in six months rather than the standard 10-month timeline.

If approved, nusinersen will be marketed under the brand name Spinraza for use in both infants and children with SMA. It's a small patient population, but Spinraza could still generate meaningful revenue for Ionis Pharma because rare-disease drugs often command six-figure price tags. Industry watchers suggest Spinraza's peak sales potential exceeds $1 billion. Biogen would benefit most from an eventual launch of the drug, but Ionis Pharma could receive up to $150 million in future milestone payments, plus tiered royalties on sales up to the mid teen percentages.

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Todd Campbell has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Biogen and Ionis Pharmaceuticals. The Motley Fool recommends Johnson and Johnson. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.