Analyst Conference Summary


Ionis Pharmaceuticals

conference date: August 8, 2017
for quarter ending: June 30, 2017 (Q2, second quarter 2017)

[at time of writing, but see below]
Forward-looking statements

Note: this is my first coverage of an Ionis conference. Because Akcea (AKCA) [pronounced ex-see-uh] was spun into an IPO in July, and Ionis owns 70% of it, coverage should involve both. Here I am just looking at IONS, and will likely either drop coverage or have to add AKCA. For Q2, Akcea reported pro-forma results, but it was still part of IONS.

I bought a very small initial lot of IONS on August 10, 2017, at $45.82 per share. See William Meyers Positions for my current list of stocks I own.

Overview: Initial revenue from Spinraza.

Basic data (GAAP):

Revenue was $104.2 million, down sequentially from $110.3 million, but up from $38.5 million year-earlier.

Net income was negative $11.2 million.

EPS (diluted) was negative $0.09.


Expects ending 2017 non-GAAP operating income in "mid $50 million range" and over $950 million cash. But it could be higher if large milestone payments come in.

Conference Highlights:

COO Lynne Parshall said "In July, working closely with us, Akcea filed for marketing authorization for volanesorsen in the EU and is on track to file in the U.S. and Canada in September. Also in July, Akcea completed its IPO in which it raised more than $190 million, including the $25 million we invested and the $50 million Novartis AG invested. The IPO was an important step in our strategy to maximize the value of our broad pipeline. As an independent, public company of which we own nearly 70%, we believe Akcea is well-positioned to create substantial value for both Akcea and Ionis shareholders. Importantly, we can stay focused on continuing to advance our pipeline of novel, best-in-class drugs while participating significantly in the value Akcea is creating through our equity ownership and sublicensing revenue and royalties on Akcea's drugs."

Revenue consisted of: $27.6 million from Spinraza royalties; $4.1 million licensing and other royalties; $65.1 million from Bayer for license of IONIS-FXI-L; $57 million in milestone payments from Biogen ($50 million for Spinraza EU approval and $5 million for a new target validation); $54 million amortization of upfront fees; $6.7 million services.

Spinraza was approved in the EU, Japan and Canada. Spinraza sales by Biogen were $203 million, which "far exceeded Wall Street expectations."

With GSK, Ionis is preparing to file for approval of inotersen for Familial Amyloid Polyneuropathy before the end of 2017.

Starting in Q3, Akcea revenue and expenses, or 70% of them, will be included with Ionis's, as consolidated P&L. Except inter-company transactions like licensing fees. Ionis is licensing 4 potential drugs to Akcea.

Non-GAAP numbers: net income $10.1 million. Mainly this excludes $21.3 million of non-cash stock-based compensation.

Cash ended at $855.7 million.

Ionis has a pipeline of 39 drugs.

Operating expense was $105.8 million, consisting of $85.5 million for R&D and $22.3 million for selling, general and administrative. Operating income was negative $1.7 million. Investment income was $2.5 million, interest expense $11.8 million. Income taxes $0.2 million.


2H guidance looks down in net income? GSK opt in? In 1H we achieved significant licenses and milestones that generated revenue. In 2H we may receive milestones. The guidance is conservative. GSK has a contractually defined date to make a decision on inotersen. We would be delighted to have inotersen back if that were there decision.

If GSK ditches, could you keep to the current timeline? Yes. We are prepared if they return it to us. We will wait for the GSK decision. They have made marketing preparations. [GSK had announced it would exit the orphan drug business]

Spinraza and SMA prevalence? Demand so far is impressive. Everything we see is consistent with what Biogen said.

Inotersen alternative versions? We feel urgency to develop a Lyca (sp?) version.

Cardiac subgroup of inotersen, data publication? Our focus is on getting ready for regulatory submissions.


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Disclaimer: My analyst call summaries may include both condensations of statements made by company representatives and my own analysis. They are not covered by any warranty. I cannot guarantee anything said by company representatives is true. I try not to make errors, but it is possible. These are my personal notes which I share with other investors and which I use as the basis of my blog and Seeking Alpha articles.

Copyright 2017 William P. Meyers