Cowen Cautiously Optimistic on Ionis Pharmaceuticals Inc (IONS) as it Circles Approval in SMA

Ionis Pharmaceuticals Inc (NASDAQ:IONS) posted its third-quarter report today as well as offered a clinical update. In reaction, Cowen analyst Eric Schmidt notes general positivity, but remains sidelined and reiterates a Market Perform rating on IONS without suggesting a price target.

For the third quarter, the biotech firm yielded $110.9MM in revenues, above the analyst’s expectations for $102.0MM, as well as $7.4MM in GAAP Net Income compared to the analyst’s projection for a Net Loss of $12.0MM.

The analyst largely attributes the robust revenue to BIIB’s milestone payment to the tune of $75MM for spinal muscular atrophy (SMA)-treating Spinraza (nusinersen) licensing. By the close of the quarter, IONS had $688MM in cash and maintained guidance for 2016 looking to pro forma NOLS in the low range of $60MMs coupled with over $600MM in cash by the close of 2016.

Schmidt opines, “U.S. and EU filings on Spinraza (partnered with BIIB) for spinal muscular atrophy are in active review with approval possible before YE. We see little regulatory or commercial risk and project peak end-user sales of nearly $2B. IONS is advancing a broad pipeline of antisense candidates, though our conviction in other drugs is far lower.”

Moreover, the analyst asserts, “We continue to view approval with a broad label […] in a devastating disease with no treatment option as a slam dunk, especially in light of the positive CHERISH data announced earlier this week.”

Overall, “We are confident in BIIB’s ability to ‘block and tackle’ and expect a robust launch. We view SMA as a blockbuster opportunity and project 2026 WW Spinraza sales of $1.95B at a price of $300K/patient/year. […] While potential competition from Avexis has been an overhang on IONS shares, we think it would be very difficult to displace an entrenched product with Spinraza’s profile in a market like SMA,” Schmidt contends.

As usual, we like to include the analyst’s track record when reporting on new analyst notes to give a perspective on the effect it has on stock performance. According to TipRanks, five-star analyst Eric Schmidt is ranked #137 out of 4,186 analysts. Schmidt has a 47% success rate and garners 14.5% in his yearly returns. When recommending IONS, Schmidt gains 77.6% in average profits on the stock.

TipRanks analytics exhibit IONS as a Buy. Based on 7 analysts polled in the last 3 months, 4 rate a Buy on IONS, while 3 maintain a Hold. The 12-month price target stands at $43.00, marking a 7% upside from where the stock is currently trading.

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