In 2017, Ionis Pharmaceuticals (IONS -1.79%) proved its RNA antisense technology can produce a bonafide blockbuster drug. Spinraza sales are firing on all cylinders right now, but incoming competition might reverse the therapy's trajectory.

Luckily for Ionis, Biogen (BIIB -2.70%) invested heavily in Spinraza's development and commercial launch. That's why Ionis and its recently spun-off affiliate Akcea Therapeutics Inc. (AKCA) still have plenty of cash to fund development of a huge clinical-stage pipeline, and perhaps launch two new drugs this summer.

Here's a closer look at reasons why 2018 could be the best year yet for Ionis Pharmaceuticals.

Person riding a rocket toward 2018.

Image source: Getty Images.

Exceeding expectations for now

Spinal muscular atrophy (SMA) may be the most common genetic cause of infant mortality in many developed nations, but it's still a rare disease with a limited patient population. In December 2016, Spinraza became the first and only Food and Drug Administration (FDA)-approved treatment that actually slows progression of the disease. If another drug enters the field, Biogen could have trouble marketing a treatment that costs $125,000 per dose and requires several doses each year.

Insurers and government end payers complained in public, but it looks like they've softened their stance where it matters. Just nine months out of the gate, Spinraza sales finished the third quarter at a stunning $1.1 billion annualized run rate. U.S. sales were much lower than expected, but rapid uptake in international markets made up the difference. As a result, Ionis thinks it finished 2017 with around $950 million in cash after its operations produced their first annual profit. 

Looking ahead, there are some gene-therapy candidates that threaten to do Spinraza's job with a single application. In particular, AveXis, Inc. (NASDAQ: AVXS) has a candidate in late-stage testing that could cause Spinraza's sharp upward trajectory to abruptly reverse course. We'll know more after AveXis meets with the FDA to discuss its candidate's application in the second quarter.

Why biotechs partner

Ionis Pharmaceuticals got to where it is today by championing an aggressive partnership model that generally lets bigger companies do the heavy financial lifting. Using Biogen's global salesforce to launch Spinraza, after the bigger biotech paid for the most expensive stages of the drug's development, puts the company in an excellent position to launch its first fully owned drug, inotersen.

Earlier this month, the FDA accepted a new drug application for inotersen as a treatment for patients with hereditary transthyretin amyloidosis, a severe condition marked by the buildup of faulty transthyretin protein fragments. The agency granted a shortened review, and an approval decision is expected on or before July 6, 2018.

The drug could run headlong into competition from patisiran, a somewhat similar drug candidate from Alnylam Pharmaceuticals (ALNY -2.36%). The FDA hasn't officially begun reviewing the application Alnylam completed late last year, but the company expects an approval decision around the middle of the year.

Scientist examining a flask.

Image source: Getty Images.

Spun off, but not forgotten

Although inotersen could run straight into competition with patisiran, the FDA is reviewing an application for a former Ionis candidate that could be the first -- and only -- available therapy for patients with familial chylomicronemia syndrome, a life-threatening genetic disorder marked by extremely high triglyceride levels that lead to bouts of pancreatitis. 

During the clinical trial supporting the candidate's application, volanesorsen lowered triglycerides by 77% and significantly reduced pancreatitis attacks. Reduced platelet levels and injection-site reactions led nearly a third of patients given volanesorsen to withdraw from the trial. Given the lack of available treatments for the life-threatening disease, though, a positive approval decision on or before the proposed action date this August seems reasonable.

Last summer, Ionis spun off volanesorsen and the rest of its lipid drugs into a separate company, Akcea Therapeutics. Despite the change in ownership, Ionis still stands to benefit greatly from any successful lipid drugs that emerge from its pipeline. Akcea is obliged to pay Ionis royalties in the mid-teens to the mid-20% range on all sales of the candidates it inherited from Ionis.

Great year, bad price

Unfortunately for bargain shoppers, I'm not the only investor to notice Ionis has set itself up for an exciting growth spurt. Ionis' market cap has swelled to about $6.7 billion, which is about 13.4 times the amount of revenue the company booked over the past year. Biotech stocks generally trade around mid-single-digit multiples of total revenue -- which means the stock could plummet if investors get nervous about the company's growth prospects.

Most analysts expect inotersen to take a backseat to Alnylam's patisiran, and generate annual sales around $300 million at its peak. Volanesorsen isn't expected to reach blockbuster status, either, but could allow Akcea to direct around $150 million in high-margin royalty revenue toward Ionis each year.

While I expect 2018 to be a banner year for Ionis, Spinraza jitters could also hammer the stock to a much more attractive entry point. With around a dozen candidates in mid-stage development, the company can be expected to have more new drug applications ready for the FDA in the years to come.