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Morningstar | Solid Spinraza Sales in Ionis' 3Q; Maintaining FVE After Waylivra and Tegsedi Regulatory Decisions

Ionis Pharmaceuticals finished the third quarter with total revenue of $145 million, up 20% from last year. Spinraza continues to contribute growth for the firm, with the number of adult U.S. Spinraza patients increasing over 20% sequentially. While Ionis ended the quarter with a net loss, we expect positive earnings for the full year. Selling, general, and administrative costs have been tracking slightly higher than our expectations due to preparation for the launches of Waylivra and Tegsedi. After adjusting for these near-term operating expenses and recent regulatory outcomes for Waylivra and Tegsedi, we are maintaining our fair value estimate of $49 per share for no-moat Ionis.

The second half of this year has been rocky for Ionis' pipeline, with a Food and Drug Administration rejection of Waylivra at the end of August. The Waylivra rejection for familial chylomicronemia syndrome was surprising, given the favorable (but nonbinding) vote from the FDA advisory committee in May and the statistically significant results from pivotal trials for the rare disease. Management has not explicitly stated the FDA's reason for the Waylivra rejection, but the firm indicated that it is in continued conversation with the FDA for a path forward. Ionis is now awaiting a decision from European regulators following the positive opinion from the Committee for Medicinal Products for Human Use in June. At this point, we have only modestly decreased our expectations for Waylivra, which are weighted with a 70% chance of approval, while we await the European decision and any potential appeal.

In October, Tegsedi (inotersen) received approval for polyneuropathy of hereditary transthyretin amyloidosis in the United States, Canada, and Europe. Tegsedi's approval closely followed Alnylam's August approval of Onpattro (patisiran) for hATTR polyneuropathy, which was the first approval of an RNAi therapy. Alnylam's Onpattro must be administered intravenously, and while Tegsedi can be self-administered, we note that Tegsedi's U.S. label included a black-box warning for thrombocytopenia and requires patient and doctor certification and weekly monitoring. We anticipate the market to be competitive throughout our explicit forecast, and we project Tegsedi sales peaking in 2022 at $235 million before competing next-generation therapies enter the market.