Ionis Pharmaceuticals (IONS -1.64%) continues to rake in royalties from its spinal muscular atrophy drug Spinraza while it waits for revenue from newly approved TTR amyloidosis drug Tegsedi to start rolling in. The Tegsedi launch increased expenses enough that the biotech was in the red for the quarter, but with $2 billion in the bank, Ionis can afford to invest in the future.
Ionis Pharmaceuticals results: The raw numbers
|Metric||Q3 2018||Q3 2017||Year-Over-Year Change|
|Revenue||$145.4 million||$118.3 million||22%|
|Income from operations||($18.6 million)||$11.3 million||N/A|
|Earnings per share||($0.03)||($0.02)||N/A|
What happened with Ionis Pharmaceuticals this quarter?
- Royalties from Biogen (BIIB -1.08%) for sales of Spinraza more than doubled year over year to $70 million. Ionis has reached the highest royalty tier, so it'll get a larger share of sales in the fourth quarter. At this point in the launch, adults with the milder form of the disease are driving sales, as are international launches.
- Revenue also included up-front payments that get amortized over the life of the project, including $14 million for the new deal with Biogen. There are also milestone payments, including $10 million from AstraZeneca (AZN 0.72%) for starting a phase 1 study for the first drug in the companies' cardiometabolic collaboration and $10 million from Biogen for starting a phase 1/2 clinical trial for a drug to treat patients with amyotrophic lateral sclerosis (ALS).
- The launch of Tegsedi by Ionis' spinoff Akcea Therapeutics (AKCA) is under way in Europe and the U.S., although Ionis didn't give much in the way of details -- likely to avoid giving any insight to competitor Alnylam Pharmaceuticals (ALNY -2.39%), which is launching a competing drug called Onpattro.
- Lipid-lowering drug Waylivra, which is also to be sold by Akcea Therapeutics, was rejected by the FDA in August, but the companies are discussing with the agency what they need to do to gain approval. The drug is still under review in the EU, so there's a possibility regulators across the pond will see the risk-benefit analysis more favorably.
- Ionis has had some recent clinical trial successes, including a phase 2 study of heart drug AKCEA-APO(a)-LRx that it's developing with Akcea and Novartis (NVS 0.52%) and a phase 2 study of cancer drug danvatirsen being developed by partner AstraZeneca.
- The company signed up Roche to a new deal for IONIS-FB-LRx to treat complement-mediated diseases for $75 million up front and potential milestones of up to $684 million as well as royalties that top out at 20%.
What management had to say
Tegsedi requires routine blood monitoring, but Stanley Crooke, Ionis' chairman and CEO, said it isn't that big a deal and even took the opportunity to presumably take a jab at Alnylam's Onpattro, which is delivered by intravenous (IV) infusion, compared to Tegsedi, which can be self-injected:
It's over in a matter of just a couple of minutes. It's rapid easy. Certainly, speaking for myself, I would rather do that than go to an infusion center and spend a day getting an IV infusion.
Chief Financial Officer Elizabeth Hougen pointed out how the growing number of partnered programs is contributing to the revenue:
For each program we advance, we are eligible to earn milestone payments and license fees. We currently have 22 partnered programs, a number that has nearly tripled since 2012. In 2012, we earned $51 million of revenue related to license fees and milestone payments. That's compared to over $135 million in license fees and milestone payments we have earned so far this year.
In the fourth quarter, with Spinraza at its highest royalty rate for the entire quarter, Ionis should see the best quarterly income for the drug since the launch. It'll also have initial sales of Tegsedi, although investors should be prepared for a slow launch, as some time will be needed to get patients set up on the drug with insurance reimbursement.
Looking further ahead, aforementioned AKCEA-APO(a)-LRx and IONIS-HTTRx, which is being developed by Roche for Huntington's disease, should start phase 3 programs soon, hopefully setting up the next round of approvals.