Ionis Pharmaceuticals (NASDAQ:IONS) may only have one drug producing meaningful revenue, but the company was still able to turn a profit thanks to the addition of payments from its collaborators, while spinning off some of its costs into Akcea Therapeutics (NASDAQ:AKCA).

Ionis Pharmaceuticals results: The raw numbers

Metric

Q4 2017

Q4 2016

Year-Over-Year Change

Revenue

$172 million

$160 million

7.4%

Income from operations

($1.7 million)

$41.1 million

N/A

Earnings per share

$0.02

$0.21

(90%)

Data source: Ionis Pharmaceuticals.

What happened with Ionis Pharmaceuticals this quarter?

  • Spinal muscular atrophy drug Spinraza added $52 million in royalty revenue based on sales of the drug by partner Biogen (NASDAQ:BIIB); other licensing and royalty revenue added another $4.5 million.
  • The bulk of the revenue, $116 million, came from partners, for drugs they've licensed.
  • Income from operations turned negative: The company increased selling, general, and administrative expenses, with spinoff Akcea Therapeutics preparing to commercialize volanesorsen, a lipid-lowering drug, and Ionis ramping up to sell inotersen, which treats hereditary TTR amyloidosis (hATTR).
  • Both drugs have been submitted and are under review by European and U.S. regulators.
  • The company was able to turn a profit on the earnings line after backing out the expenses for Akcea Therapeutics, which get incorporated into its profit-loss statement since Ionis is still the majority shareholder.
  • Beyond volanesorsen and inotersen, some of Ionis' pipeline of 45 drugs also read out positive data during the quarter; these included AKCEA-APOCIII-LRx, which is part of the lipid-drug collaboration with Akcea and Novartis, and IONIS-HTTRx for Huntington's disease, which Roche subsequently licensed.
  • At the end of December, Ionis and Biogen expanded their partnership to develop additional drugs to treat spinal muscular atrophy.
  • Ionis' first oral drug, IONIS-JBI1-2.5Rx, entered the clinic under a partnership with Johnson & Johnson's Janssen unit.
Doctor talking to patient

Image source: Getty Images.

What management had to say

On the launch of inotersen, chief business officer Sarah Boyce noted that Ionis is still looking for a partner: "As we successfully build a high-quality commercial infrastructure to support inotersen's launch, we have raised the bar for potential partners, which has allowed us to narrow down our potential choices. We look forward to making a decision on partnering shortly."

As important as Spinraza, volanesorsen, and inotersen are to Ionis' near-term future, chairman and CEO Stanley Crooke seems more excited about the advancing early-stage pipeline of next-generation ligand-conjugated antisense (LICA) drugs: "We believe that our LICA technology is a game-changing advance for many of our programs and [is] a major driver of value for us." Twelve drugs are using the technology currently in development, including four in phase 2 trials.

Looking forward

The next major event for volanesorsen is a Food and Drug Administration advisory committee meeting on May 10, ahead of a potential approval. A couple of days before, the FDA should release documents for the committee, giving investors a first look at what the agency thinks of the drug's efficacy and safety data.

For inotersen, the FDA has told Ionis that it doesn't plan to hold an advisory committee meeting, so there won't be a preview of the regulatory decision; it's expected by July 6 but could come early, given the unmet need for hATTR patients. A quick approval would be welcome, given the impending competition from Alnylam Pharmaceuticals' patisiran.

On the pipeline front this year, look for phase 2 data this year from more than six studies, and another six trials starting at the phase 2 or phase 3 levels.

With two potential approvals this year and a pipeline behind those, it shouldn't be too long before Ionis' royalty revenue surpasses its revenue from partners.

Brian Orelli has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Alnylam Pharmaceuticals, Ionis Pharmaceuticals, and Johnson & Johnson. The Motley Fool recommends Biogen. The Motley Fool has a disclosure policy.