Ionis Pharmaceuticals Inc (NASDAQ: IONS) is headed for the top in the pre-market hours this morning after announcing an expanded collaboration with Biogen Inc (NASDAQ: BIIB). Of course, the news that the collaboration between the two companies is expanding is exciting to investors who are pushing the stock upward. Today, we’ll talk about:
- The expanded collaboration;
- what we’re seeing from IONS as a result;
- and what we’ll be watching for ahead.
IONS Announces Expanded Collaboration With BIIB
As mentioned above, Ionis Pharmaceuticals is having a strong start to the trading session this morning after announcing an expanded collaboration agreement. In a press release issued early this morning, the company announced that it has expanded its strategic collaboration with Biogen with a new ten-year collaboration agreement. The agreement stipulates that the companies will collaborate to develop novel antisense drug candidates for a broad range of neurological diseases.
The collaboration announced today capitalizes on Biogen’s expertise in neuroscience research and drug development while taking advantage of the leadership in RNA targeted therapies displayed by IONS. The ultimate goal of the collaboration is to develop a broad pipeline of investigational therapies.
Under the terms of the agreement, IONS will receive a cash payment in the amount of $1 billion. This payment includes a $625 million payment to purchase 11,501,153 shares of Ionis common stock at a price of $54.34 per share, representing a premium of approximately 25%. The other $375 million included in the $1 billion payment represents an upfront payment associated with the collaboration.
The terms of the agreement also provide Biogen with the right to license therapies created through the collaboration. BIIB will also be responsible for the development and commercialization of these treatments. Also, BIIB will pay IONS milestone payments, license fees and royalties on net sales. In a statement, Michael Vounatsos, CEO at BIIB, had the following to offer:
Biogen and Ionis share a commitment and passion to bring new therapeutic options to those living with neurological diseases where the unmet medical need is high and growing… We believe that this new collaboration will allow us to meaningfully expand our neuroscience pipeline in a way that differentiates Biogen. With the large number of diseases that could benefit from Ionis’ antisense platform, we believe that the time is now to build upon our highly productive collaboration with Ionis as we aim to transform the treatment of neurological diseases around the world.
The statement above was followed up by Stanley T. Crooke, M.D., CEO and Chairman at IONS. Here’s what he had to offer:
There is no better partner for Ionis to develop new antisense drugs to treat neurological diseases than Biogen. Their demonstrated perseverance, dedication, and commitment to innovation in developing drugs for these challenging diseases is unmatched… These attributes and Biogen’s investment in neurological diseases have been important to the successes we’ve achieved already in the collaboration. Working with Biogen, we have achieved what neither company could have achieved alone. Together, we believe we can create a robust neurological disease franchise fueled by Ionis’ antisense technology and highlighted by the tremendous success of SPINRAZA. This new collaboration provides the potential opportunity to build an even stronger pipeline for Biogen and Ionis, with the expectation of bringing further benefit to patients in desperate need and value to Ionis’ shareholders. This new collaboration’s financial terms, upfront payment, milestone payments, and royalties are substantially higher compared to our previous collaborations with Biogen, which demonstrates the value we have created in applying Ionis’ antisense technology platform to neurological disease. We believe Biogen’s equity investment reflects its commitment to Ionis, to antisense technology, and to the success of this collaboration.
What We’re Seeing From The Stock
One of the first lessons that we learn when we start to dig into the market is that the news causes moves. In this particular case, the news proved to be overwhelmingly positive. This new collaboration will not only provide Ionis with immediate funding, it also creates an opportunity to build a pipeline of potentially profitable products over the course of the next decade. So, it’s no surprise that the stock is headed for the top today. Of course, our partners at Trade Ideas were the first to alert us to the gains. At the moment (8:00), IONS is trading at $51.50 per share after a gain of $5.65 per share or 12.32% thus far today.
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What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will continue to keep a close eye on IONS. In particular, we’re interested in following the story surrounding the company’s partnership with Biogen and the new products that arise as a result of this partnership. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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