To buy or not to buy, that is the question.

With apologies to William Shakespeare, that really is the question for investors looking at Ionis Pharmaceuticals (NASDAQ:IONS) stock. Ionis accomplished a lot last year, but the stock's performance wasn't anything to get excited about. So far in 2018, Ionis' share price is up -- but only by a little.

Past and current stock performance doesn't help assess whether or not Ionis can deliver for investors in the future, though. Is Ionis Pharmaceuticals a buy? Here are the arguments for and against the biotech stock.

Red ribbon forming question mark on top of cash spread out on surface

Image source: Getty Images.

Buy -- there's a lot of potential

You could compare Ionis' 2017 revenue of less than $508 million (most of which stemmed from collaborative agreements) against its market cap of close to $6.5 billion and conclude the stock is too expensive to consider. However, that revenue total doesn't indicate the potential growth story that Ionis could easily become.

Spinal muscular atrophy (SMA) drug Spinraza, which Ionis licensed to Biogen (NASDAQ:BIIB), is just getting cranked up. Biogen launched Spinraza near the end of 2016. The biotech made nearly $884 million from the drug, with Ionis receiving royalty payments of $112.5 million. Analysts project that Spinraza could achieve peak annual sales of $2.5 billion, which translates to hundreds of millions of dollars for Ionis.

It's possible that Ionis will claim two more drugs generating revenue later this year. Ionis spun off Akcea Pharmaceuticals (NASDAQ:AKCA) last year, giving the new company rights to four drugs targeting treatment of lipid disorders. An FDA approval decision on the most advanced of these candidates, volanesorsen, is expected by Aug. 30, 2018. 

Ionis also recently licensed two additional drugs to Akcea -- inotersen and IONIS-TTR-LRX (which was renamed as AKCEA-TTR-LRX). Inotersen, which targets treatment of hereditary TTR amyloidosis (hATTR), is under review by the FDA, with an approval decision expected by July 6, 2018. 

Then there's Ionis' midstage pipeline, which is loaded with 15 promising candidates. Several of these programs have already been licensed to partners. Biogen, for example, acquired rights to experimental drugs for treating Alzheimer's disease and amyotrophic lateral sclerosis (ALS). However, Ionis or Akcea claim sole rights to five of the candidates. 

Ionis has plenty of shots on goal. That's why the biotech's market cap is where it stands -- and it's why investors should consider buying the stock.

Don't buy -- there's too much risk

Now for the pessimistic view of Ionis. While the company does have a lot of potential, much of that potential is already baked into the stock price. What's more, Ionis also has a lot of risk.

Although Spinraza got off to a great start in its first year on the market, patients start off taking more frequent doses of the drug then move to less frequent dosing. Practically speaking, that means Biogen must get increasingly more patients on Spinraza to keep the sales trajectory going. If it doesn't, Ionis could feel the negative impact of slowing sales growth. In addition, Spinraza could face competition within the next few years.

It won't be an easy path to success for anticipated new drugs, either. Inotersen, if approved, could face stiff competition from Alnylam Pharmaceuticals' (NASDAQ:ALNY) patisiran. Results from a late-stage study of patisiran showed that it could be more effective than inotersen.

The challenge for volanesorsen could be safety concerns. Five out of 33 patients in a late-stage study of the drug dropped out because of declining blood platelet counts. Another five discontinued treatment due to injection site reactions. That's a not-very-encouraging dropout rate of 30%.

And while Ionis' pipeline includes several experimental drugs in phase 2 testing, the reality is that the odds aren't in favor of most of them making it to commercial stage. The probability of a drug in phase 2 clinical studies eventually winning regulatory approval is only 15%, according to biotech trade association Biotechnology Innovation Organization. 

Final verdict

My view is that Ionis should be able to grow enough to justify its current pricey market cap. However, Alnylam's results for patisiran could seriously hamper the ability for Ionis and Akcea to enjoy as big of a success for inotersen as hoped.

I'm sort of on the fence with Ionis. It could be a long-term winner, but there's a decent chance that it will underperform many other biotechs over the next few years. Ionis isn't necessarily a bad stock to buy, but my take is that there are better choices for investors.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.