Could This Drug Help Ionis Stock Recover From a Disappointing 2016?

By Jim Crumly Markets Fool.com

Mid-cap biotech Ionis Pharmaceuticals (NASDAQ: IONS) announced results from a pivotal trial for an intriguing rare disease drug on March 6, and the market promptly dinged the stock 14% in the next two days over safety concerns. But here's the kicker: the results are actually very positiveand bode well for investors who are in this stock for the long run.

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Evidence for effectiveness of the drug is very strong

Ionis' volanersorsen is an extremely promising treatment for a debilitating disease that has no current cure. Familial Chylomicronemia Syndrome (FCS) is an inherited, rare, life-threatening disease that causes extremely high levels of triglycerides in the blood. The result is a fat layer in the blood that causes debilitating symptoms in the estimated 3,000 to 5,000people with the disease worldwide. All current treatments for reducing triglyceride levels in the bloodstream are ineffective these patients.

The latest volanersorsen results from a 52-week phase three trial called APPROACH showed a 77% reduction in triglyceride levels in the 33 patients given the drug, compared with an 18% increase in the 33 subjects on placebo. Even better news for FCS sufferers is that none of the subjects receiving the drug suffered an attack of pancreatitis, a common and potentially fatal complication of FCS.

The APPROACH study confirmed earlier results from a 26-week phase three trial that were announced in December. In that study of 113 patients with severely elevated triglyceride levels, those levels were reduced by 71.2% compared with 0.9% in placebo recipients. The two trials together have yielded strong evidence of effectiveness that should be sufficient to win regulatory approval for the drug.

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The recent results raised market worries about safety... again

Ionis stock had run up in anticipation of these study results, but they dropped immediately when the news came out. The likely reason: reprise of safety concerns that pummeled the stock in 2016, including a heart-stopping 39% dip in a single day in May. At that time, a trial for a different drug revealed incidences of lowered platelet counts (thrombocytopenia) in some subjects, and observers worried that the issue could be a problem for Ionis' entire platform of RNA antisense drugs.

Those concerns were mostly answered last year for the drug in question, but the March 6 announcement about the volanesorsen trial revealed that five test subjects discontinued the trial due to lowered platelet counts, and three of those patients had serious, grade four thrombocytopenia. This came as a big surprise to the market, as the results in December showed no instances of platelet events at all. Even the mention of platelet counts would have been enough to reignite worries about the drug and the platform, but the severity was notable. And the company also revealed that another five subjects dropped out due to injection site reactions that the company termed "mild."

But the concerns are likely overblown

The press release stated the numbers for the adverse events, but the conference call the same day provided more explanation that should set minds at ease. Last May when the news of platelet concerns came out, the company instituted a program of monitoring platelet levels in the test subjects of the APPROACH study. All of the drop-outs happened before that point in time; there were no test discontinuations in the last six months of the test. In all three of the patients with grade four thrombocytopenia, the conditions resolved without incident when the dosing stopped.

Most importantly, the company presented data that showed that wide variations in platelet counts is a characteristic of FCS and, in fact, 55% of FCS patients have had at least one episode of thrombocytopenia. Further, studies of historical data on FCS patients show that platelet counts are positively correlated with triglyceride levels. So in the initial weeks of the study, when triglyceride levels are coming down most rapidly, it would not be surprising to see platelet levels declining as well. These episodes are apparently a consequence of the disease, not of the drug. The study in December included only seven patients with FCS, so the fact that platelet declines didn't show up then was probably just luck.

What about the injection site reactions? Those discontinuations also happened around the time of the platelet issue going public, and the company thinks anxiety about safety concerns could have played a role in patients deciding to drop out.

A successful launch will be big

Given the fact that this potentially fatal rare disease has no approved treatments and that volanesorsen is so effective in reversing its effects, FDA approval of the drug would seem to be highly likely even if there had been side effects more serious than the ones reported. The company expects to file new drug applications in the U.S., Canada, and Europe later this year and launch in 2018.

Investors in the stock should be overjoyedbecause success for this drug portends even greater success for the company in the future. The drug is also in phase three trials for the additional indication of a second rare disease,Familial Partial Lipodystrophy, and the wholly owned subsidiary that is developing volanesorsen has teamed up with Novartis to test an enhanced version for the much broader indications of high triglycerides and high lipoprotein(a) in people at risk for heart disease.

Proving the effectiveness of Ionis' first wholly owned drug is a big step ahead for the company and goes a long way toward validating Ionis' RNA antisense platform. Overall, due to the value of its extensive pipeline, Ionis should be attractive to biotech investors with some tolerance for volatility and risk.

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Jim Crumly owns shares of Ionis Pharmaceuticals. The Motley Fool owns shares of and recommends Ionis Pharmaceuticals. The Motley Fool has a disclosure policy.