Ionis Pharmaceuticals (NASDAQ:IONS)
After the market closed on December 23, Ionis had announced that it had received FDA approval, together with Biogen, for its Spinal Muscular Atrophy drug. This drug, known as Spinraza, was developed by both companies to treat patients with Spinal Muscular Atrophy (SMA), a rare-genetic disorder. This was a huge surprise because the approval came many months ahead of time. The FDA wasn’t supposed to decide upon approval until May 26, 2017. Either way, this is welcome news for investors and patients who have been waiting for this day to come, as there is currently no FDA-approved treatment option for patients with SMA.
It was a great day for patients who had never had an FDA-approved option to treat SMA. SMA is a rare genetic disease that robs patients of their ability for motor movement. In other words, it affects movement of muscles, ability to walk, ability to eat, and possibly ability to breathe. In addition, it is the leading cause of genetic deaths among infants. The fact that no treatment option had ever been approved for this indication means that Ionis and Biogen had a pretty high chance of approval to begin with. The positive phase 3 results just reinforced the FDA’s ability to issue marketing approval for the drug.
Ionis and Biogen expect to launch the drug sometime in early 2017. It will help both companies in terms of the amount of revenue they generate, which is a huge plus, especially since Ionis will share that revenue stream with Biogen. In addition to Ionis generating a revenue stream, it has already received a lot of money for the initial deal. The deal was made back in 2012, where Biogen paid an upfront payment of $29 million, and $45 million in clinical milestone payments. All that is good, but the main deal comes from the approval of Spinraza. With the approval of Spinraza, Ionis is eligible to receive another big payment from Biogen for a total $150 million. That is extra cash that Ionis could use to build up the rest of its pipeline.
Even though things are shaping up well for Ionis and Biogen, they won’t be in the clear for too long. There is a competitor, AveXis, which is backed by Roche. It is preparing to start a pivotal phase 3 trial in early 2017. It might have a good chance to compete against Ionis’ drug, Spinraza, because it will require fewer doses. In addition, the efficacy might be somewhat improved, and that would make a huge difference for patients. Still, that will give plenty of time for both Ionis and Biogen to make billions of dollars. AveXis’ drug will first have to obtain positive late-stage results in order to obtain FDA approval. Even then, there is no guarantee that the FDA will approve its drug. In the meantime, that gives both Ionis and Biogen some time to generate revenue from the SMA patient population. The stock should see a nice lift on Tuesday because of this approval. Depending upon technical signals, the stock should make new highs over $60 per share.
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