Ionis Pharma's Target Lifted To $68 Following More Favorable Spinraza Ramp Estimates

BMO Capital raised its price target on Ionis Pharmaceuticals Inc IONS shares to $68 from $61 after the brokerage increased its Spinraza estimates to reflect a faster ramp based on the broad approval and a higher price point announced by partner Biogen Inc BIIB.

Spinraza To Launch In Q1

BMO assumes Spinraza will launch in the first quarter, with broad adoption across Type 1-3 Spinal Muscular Atrophy patients. Biogen announced a WAC price of $125,000, which translates to $750,000 for the first (loading doses) 12 months, followed by an annual maintenance cost of $375,000.

Estimating Cost And Sales

“The gross annual cost of $750,000 for a new patient and $375,000 for maintenance exceeds our prior assumption of $300,000,” analyst Do Kim wrote in a note.

Kim estimates $2.4 billion Spinraza worldwide peak sales with Ionis receiving 15–17 percent tiered royalties.

Kim maintains an Outperform rating on Ionis, as additional data readouts in the first half of 2017 could drive further upside in the shares.

Further Justification For Outperform Rating

“We view the risk/reward for the January 5th R&D update as skewed to the upside, given limited expectations for earlier pipeline drugs including DMPK-2.5, GCGR-Rx and FXI-Rx,” Kim continued.

Meanwhile, the analyst noted that the focus of TTR-Rx study will be efficacy. TTR-Rx is being studied for the treatment of Familial Amyloid Polyneuropathy. Ionis is partnered with GlaxoSmithKline plc (ADR) GSK for the development of TTR-Rx.

Kim projects $3.7 billion TTR-Rx worldwide peak sales, risk-adjusted with 85 percent and 60 percent probability of success for FAP & FAC/ wtATTR patients, respectively, with Ionis receiving 15–17 percent tiered royalties.

At last check, shares of Ionis were down 4.36 percent at $49.29, while Biogen had gained 0.27 percent to $290.05