Why Ionis Pharmaceuticals Inc. Skyrocketed Higher Today

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What happened

Ionis Pharmaceuticals (NASDAQ: IONS) is up 20.8% at noon EST, after announcing with its partner Biogen (NASDAQ: BIIB) that their spinal muscular atrophy (SMA) drug nusinersen, which now goes by the branded name Spinraza, passed another phase 3 trial. Because Biogen is larger and not as dependent on Spinraza as Ionis, Biogen's shares are only up 7%.

So what

Earlier this year, the duo announced that Spinraza helped infants with type 1 SMA. The announcement today is for children with later-onset SMA, who fall into the type 2 class.

The results come from an interim look at the data, which caused the study to be stopped early because it was clear the drug was working. Specifically, over the 15 months patients took Spinraza, they had a mean improvement of 4.0 points on a test that measures different functional motor skills. Untreated patients had a decline of 1.9 points.

While it seemed likely that Spinraza would probably help type 2 patients since it was working in type 1 patients, some of today's gain is probably because of the magnitude of the difference between Spinraza-treated patients and the control group. Improved motor function implies that the children will live longer, which means they'll be taking the drug for a longer time, increasing sales.

Now what

Ionis and Biogen have already submitted marketing applications to the U.S. Food and Drug Administration and to European regulators. On Biogen's third-quarter conference call last month, Michael Ehlers, its head of research and development, said, "We've included data across all of our studies as well as preclinical data. We are going to seek a broad label for the treatment of SMA." Looks like Biogen is going to have to stuff a little more data into the application, which should help it get that "broad label" -- that is, approved for as many patients as possible.

Normally, adding data after an application is submitted causes an automatic delay of an FDA decision, but Biogen has said the agency is motivated to review the application quickly, given the unmet need for SMA treatments. Even if the submission causes a delay in approval, it'll still result in more sales for Biogen and Ionis, compared to waiting for an approval in type 1 SMA and then submitting a supplementary marketing application to get a second approval in type 2 SMA.

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Brian Orelli has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Biogen and Ionis Pharmaceuticals. 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.