Should you buy Ionis Pharmaceuticals, Inc. (NASDAQ:IONS) stock? Shares of the biotech are cheaper now than they were at the beginning of the year, with Ionis stock down around 10% year to date. But buying on the dip only makes sense if there's a good chance the dip is only temporary.

Whether or not Ionis is poised for a rebound depends on how well the company's current products and pipeline candidates perform. Wall Street analysts think highly of the biotech, with the average one-year price target reflecting a 30% premium over Ionis' current share price. Are the analysts right? Here are the pros and cons of buying Ionis stock.

Gloved hand holding a beaker in front of the face of a scientist wearing safety eyeglasses

Image source: Getty Images.


Ionis has solid revenue coming in the door thanks to Spinraza. Biogen (NASDAQ:BIIB) markets the spinal muscular atrophy (SMA) drug, but Ionis receives royalties on all sales. In Q1, those royalties totaled $41 million, up from $5 million in the prior-year period. 

But Ionis isn't a one-hit wonder. The company already has another drug on the market, Kynamro, which treats homozygous familial hypercholesterolemia (HoFH). Kynamro is being commercialized by Kastle Therapeutics. 

More products could reach the market in the near future. Ionis hopes to win Food and Drug Administration approval by Aug. 30, 2018, for Waylivra (volanesorsen) in treating familial chylomicronemia syndrome (FCS). The biotech also has another FDA decision on the way in October for Tegsedi (inotersen) in treating rare genetic disease hereditary transthyretin amyloidosis (hATTR). 

Ionis' pipeline has attracted interest from several major drugmakers. AstraZeneca has licensed several antisense drugs from Ionis. Bayer licensed an experimental anticoagulant. GlaxoSmithKline is partnering with Ionis on the development of two hepatitis B virus drugs. Novartis (NYSE:NVS) has options to license two drugs targeting cardiovascular diseases. Roche is working with the biotech on developing an antisense drug to treat Huntington's disease.

But the biggest partnership of all for Ionis is with Biogen. In April, Biogen expanded its collaboration with Ionis in a deal that gave the smaller biotech $375 million up front and provided Biogen a $625 million stake in Ionis.

Thanks to the latest Biogen transaction, Ionis will claim a cash stockpile of more than $2 billion. It has two drugs likely headed for regulatory approval. And it has a whopping 23 other programs in its clinical pipeline. Investors who are bullish about Ionis could have a solid argument to make that this company is worth more than its current $5.6 billion market cap.


What's not to like about Ionis? First, Spinraza could soon face stiff competition. AveXis, which was acquired by Novartis in April, hopes to launch a gene therapy for treating SMA in 2019. This could be bad news for both Biogen and Ionis.

Speaking of competition, Ionis should have its hands full battling rivals for Tegsedi assuming the drug wins approval. Alnylam (NASDAQ:ALNY) anticipates winning FDA approval for its hATTR drug patisiran within a few weeks. Because the FDA delayed its decision on Tegsedi, Alnylam appears to be in position to reach the market first. In addition to its first-mover advantage, patisiran appears to have an edge over Tegsedi in efficacy and safety based on clinical data for the two drugs. 

Pfizer is also in the picture as a competitor to both Alnylam and Ionis. The big pharma company announced surprisingly positive results for its TTR drug tafamidis earlier this year. 

Waylivra could have its own challenges. Although results from the phase 3 study for the drug were positive overall, nearly one-third of patients in the study dropped out due to injection site reactions or reductions in blood platelets.

Also, it's important to note that both Tegsedi and Waylivra will be marketed by Ionis' spinoff company, Akcea Pharmaceuticals (NASDAQ:AKCA), assuming the drugs win approval. Ionis owns 75% of Akcea, but the licensing deal between the companies means that Ionis won't pocket all of the profits from sales of the drugs.  

It's fair to say that Ionis' other already-approved product, Kynamro, has been a dud so far. Ionis doesn't even provide details for royalties specific to the drug in its financial results.

That leaves Ionis' pipeline. The biotech definitely has plenty of candidates in the hopper. The problem is that all of them other than Tegsedi and Waylivra are in phase 1 or phase 2 testing. Based on historical data, the chances of early-stage candidates eventually winning approval are very low.

Time to buy?

I wouldn't bet against Ionis. The biotech's antisense technology has already shown a lot of promise. There are plenty of variables that could work in the company's favor to make it a winner over the long run.

However, I wouldn't bet on Ionis, either -- at least not at this point. While I think the odds are pretty good that both Tegsedi and Waylivra will win regulatory approvals, the jury is out on how successful the drugs will be commercially. I'm also concerned about the impact AveXis' gene therapy (if approved) could have on Spinraza sales. For now, my take is that there are better stocks to buy than Ionis.