Ionis Pharmaceuticals: Platform Technology Play With Multiple Irons In The Fire

Summary

• Shares have more than doubled over the past three years and risen by 20% year to date.
• The company is a rarity in biotech due to very strong balance sheet, growing income stream, and many irons in the fire.
• Roche-partnered Huntington's program could be the first to market.
• Competition fears for Spinraza appear overblown, at least in the near term.
• The stock is a Buy, especially for investors who lean toward value plays and have a long-term time horizon.
• I do much more than just articles at ROTY : Members get access to model portfolios, regular updates, a chat room, and more. Get started today »

Shares of Ionis Pharmaceuticals (NASDAQ:IONS) have more than doubled over the past three years. In 2019, the stock price rose by as much as 60% (hitting mid 80s) before pulling back for a still respectable 20% year to date gain.

This leader in the RNA-targeted therapeutics space has been on my radar for a while, but surprisingly, I've never gotten around to writing an article on it despite multiple reader requests. It's been discussed in ROTY's Live Chat quite a bit, especially in regards to competition from Novartis' Zolgensma in SMA (spinal muscular atrophy).

Recently, following positive phase 2 results GlaxoSmithKline (GSK) exercised its option to license Ionis' antisense medicines for treating people with chronic hepatitis B virus infection (the smaller company to receive milestone payments of up to $262 million plus tiered royalties on net sales). Couple that good news with a share price that's pulled back significantly from highs and I'm interested in taking a look at what value creating catalysts could lie ahead.

Chart

Figure 1: ARQL daily advanced chart (Source: Finviz)

When looking at charts, clarity often comes from taking a look at distinct time frames in order to determine important technical levels to get a feel for what's going on. In the above chart (daily advanced), we can see April's gap down that came as a result of promising late-stage data for Novartis' Zolgensma in SMA (a competitive threat which could cut into Ionis' growing Spinraza royalty stream). Since then, the share price has continued to consolidate in the mid 60s range (in August briefly rising above $70 and then pulling back to prior support). An important question for us to figure out is whether this recent pullback represents an attractive entry point for prospective investors.

Overview

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