Ionis Wins Price Target Hike On Partner Biogen's Guidance

Ionis Pharmaceuticals Inc IONS's partner Biogen Inc BIIB reported fourth-quarter results Wednesday before the market open, revealing that sales of the spinal muscular atrophy treatment Spinraza came in at $470 million, missing the consensus estimate.

Spinraza was developed by Ionis in collaboration with Biogen, which subsequently acquired an exclusive license to the drug.

The Analyst

Morgan Stanley analyst David Lebowitz maintained an Equal-weight rating on Ionis and raised the price target from $47 to $51. 

The Thesis

The Q4 Spinraza miss is attributable to patients outside of the U.S., with the company suggesting that headwinds — including a shift from loading to maintenance doses in some mature EU markets, shipment timing in certain distributor markets and an unfavorable country mix — are to blame, Lebowitz said in a Wednesday note.

Yet Biogen now expects Spinraza revenues to grow by the mid-to-high teens in 2019 thanks to mature and emerging market growth, the analyst said.

Morgan Stanley models stable global revenues but slower patient growth outside the U.S. relative to 2018. 

Lebowitz raised his Ionis royalties estimate from $256 to $273, which in turn led to the upward adjustment of the price target.

Regarding Ionis' other pipeline assets, Morgan Stanley sees antisense as a promising drug development platform. The sell-side firm remains on the sidelines, as it believes safety and tolerability concerns are likely to remain an overhang on shares.

The launch of Tegsedi, Ionis' treatment option for adults with polyneuropathy of hereditary transthyretin-mediated amyloidosis, is underway. Sales sales could be impacted by thrombocytopenia concerns and weekly blood monitoring, according to Morgan Stanley. 

The Price Action

Ionis shares added about 7.5 percent in 2018 and were trading down 0.56 percent at $54.24 at the time of publication Wednesday. 

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