4 Factors That Catapulted Ionis Pharmaceuticals Inc. 68% Higher in November

By Sean Williams Markets Fool.com


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What happened

Shares of Ionis Pharmaceuticals (NASDAQ: IONS), a biopharmaceutical company that utilizes its proprietary antisense drug development platform to combat a host of ailments ranging from cancer to rare diseases, catapulted higher by 68% in November, according to data from S&P Global Market Intelligence. Four catalysts stood out as being responsible for Ionis Pharmaceuticals' November surge.

So what

Hands down the biggest factor boosting Ionis' valuation was the Nov. 7 announcement from Ionis and partner Biogen (NASDAQ: BIIB) that Spinraza (formerly nusinersen) had met its primary endpoint at the interim analysis of the phase 3 CHERISH study in patients with later-onset spinal muscular atrophy (SMA). The results demonstrated a significant improvement in motor function in the children taking Spinraza compared to those who hadn't taken the drug. The findings of CHERISH painted a similar story as the efficacy observed in the ENDEAR study. Given the lack of options in treating SMA and the success Spinraza has demonstrated thus far, Biogen and Ionis could have a blockbuster on their hands.

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Second, on Nov. 15, Ionis reported positive phase 1/2a study results of IONIS-ANGPTL3-LRx in subjects with elevated triglycerides. The experimental drug, which is designed to lower angiopoietin-like 3 (a regulator of lipoprotein metabolism), demonstrated mean reductions of 83% for angiopoietin-like 3, 66% for triglycerides, and 35% for LDL-cholesterol, which is the bad kind. While early, this data would suggests that IONIS-ANGPTL3-LRx could have lipid-reducing qualities for patients presenting with high cardiovascular risk, and for patients who may be at risk for liver fat accumulation (i.e., nonalcoholic steatohepatitis).

Third, Ionis Pharmaceuticals benefited from its third-quarter earnings results, which were released early morning on Nov. 9. For the quarter, revenue rose by 126% to $110.9 million the prior-year period, with Ionis receiving the bulk of its boost from a $75 million milestone payment from Biogen because of Spinraza. Though the $110.9 million in revenue was $2.4 million below estimates, the $0.06-per-share profit was $0.01 per share better than expected.

Finally, Donald Trump winning the presidency is a general positive for the biotech industry since opponent Hillary Clinton was planning to take a tough stance on the pricing power of drugmakers. Trump, while he has criticized the cost of prescription drugs before, is more likely to tackle other issues first, giving drug developers some breathing room for the time being. Since Ionis' developed drugs use its proprietary antisense platform, they can be quite pricey.

Now what

With roughly 30 clinical trials ongoing and about one dozen development partners, November was a good reminder of why Ionis might be the developmental drug stock you should own in your portfolio.

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On one hand, it's probably going to take time for Ionis to be profitable on an ongoing basis based on its still-minimal approved product line. An approval of Spinraza will help, but that alone is unlikely to push Ionis into the black on a recurring basis.

Thankfully, Ionis has a number of other early , mid-, and late-stage products it can count on, as well as a veritable laundry list of milestone payments it can earn to keep the lights on without having to turn to capital raises via share offerings (as is common for publicly traded biotech companies). It also has its proprietary drug platform which has been churning out about five clinical-worthy drugs every year, which is exceptionally good considering the high failure rate in the discovery, lab, and preclinical stage for experimental drugs.

Ionis ended the third quarter with nearly $688 million in cash, cash equivalents, and short-term investments, meaning it has more than enough capital to reinvest heavily in research and development. As long as positive clinical catalysts keep hitting the newswire, then there's little stopping Ionis from heading higher over the long run.

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Sean Williamshas no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen nameTMFUltraLong, and check him out on Twitter, where he goes by the handle@TMFUltraLong.

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