Ionis Pharma: Too Many Programs Have Failed To Produce Confidence (NASDAQ:IONS)

I covered Ionis Pharmaceuticals, Inc. (NASDAQ:IONS) once before after the failure of its phase 3 Huntington’s Disease trial for tominersen in August last year. This molecule, which was licensed to Roche, had a trial ongoing in HD, and previously completed a highly successful phase 2 trial. However, in the phase 3 trial, tominersen failed to show better efficacy than placebo, and when dosing was increased, outcomes worsened. However, Roche may be planning a phase 2 trial for tominersen for younger adult patients with lower disease burden, who may benefit from the molecule, according to some subgroup analysis.

HD is a relatively small market compared to the large Ionis pipeline, and since it was licensed out, Ionis would only be making a small amount of money out of the total revenue. I also noted that while Ionis is a market leader in antisense technology, the failure of this particular molecule in no way implicated the entire platform, because of two things – one, how tominersen works is different from, say SPINRAZA, their approved drug, and two, the specific reason for the trial failure, which appears to be tominersen’s effect in both wild type and mutant huntingtin, can be addressed. So I was surprised at the huge fall of IONIS stock – more than 50% – on this trial failure. That was where I left it off in August last year.

At that time, tofersen in SOD1 ALS therapy was one of Ionis’ most advanced programs, and it was going to announce topline phase 3 data in the third quarter. This data was duly announced, and the trial failed to achieve its primary endpoint. However, interesting drug activity was seen, and there may yet be a future for tofersen in SOD1 ALS. An open label extension study showed promise. Here’s the gist:

On October 17, 2021, Biogen announced that the VALOR trial missed its primary endpoint of slowing decline on the ALSFRS-R at week 28 (Oct 2021 news). The top-line results included 60 fast progressors, with 39 receiving tofersen, 21 placebo. Treatment was associated with a numerical improvement of ALSFRS and other endpoints, but it fell short of statistical significance. SOD1 protein in CSF was halved by treatment. Plasma NfL declined by two-thirds. In an open-label extension, patients who switched from placebo to treatment had decreases in CSF SOD1, NfL, and their rate of decline. Most adverse events were related to spinal infusions or ALS. Five people in the treatment group showed neurological side effects, including four with inflammation around nerves or the spinal cord, and one with an unspecified nervous system disorder.

There was also another ALS molecule partnered with Biogen, which was expecting phase 2 data this year. There is another ALS program that is running a phase 3 trial with data in 2024. Recently, Biogen decided to terminate BIIB078, a candidate for C9orf72-associated amyotrophic lateral sclerosis (ALS), after it failed to reach stat sig in an early stage 106-patient trial.

One more program that failed was vupanorsen, which was being run by Pfizer in cardiovascular (CV) risk reduction and severe hypertriglyceridemia (SHTG). After reviewing phase 2 data, which met its primary endpoint, Pfizer decided to discontinue development and return the molecule to Ionis. According to them, “the magnitude of non-HDL-C and TG reduction observed did not support continuation of the clinical development program for CV risk reduction or SHTG.”

This is Ionis’ fourth failure in less than a year.

Outside of ALS, Ionis will also produce data from eplontersen, its amyloidosis drug, in mid-2022. This molecule will compete with Alnylam’s vutrisiran, which was recently approved for the indication. In December 2021, the company signed a major deal with AstraZeneca to co-develop eplontersen. TTR amyloidosis is a multi-billion dollar opportunity with up to half a million patients worldwide. The market is large enough to accommodate two competing drugs.

Under the terms of the agreement, Ionis will receive $200mn in upfront payment, up to $485mn in milestones, and up to $2.9bn in sales-related milestone payments. Ionis is also eligible to earn royalties in the range of low double-digit to mid-20s percentage depending on region.

Besides eplontersen, two other near-term opportunities with solid market potential are Olezarsen and Donidalorsen. Olezarsen is targeting hypertriglyceridemia while Donidalorsen is targeting Hereditary angioedema (HAE). Olezarsen has a phase 3 trial which will produce data next year. The Phase II OASIS-HAE started with donors in patients with hereditary angioedema will produce data in 2024.

From their midstage pipeline:

AstraZeneca presented positive Phase IIb data in ACC in April from the ITG study of ION449, our PCSK9 medicine in patients who are at high risk for cardiovascular disease with hypercholesterolemia. The study managed primary and secondary endpoints show good safety and tolerability and ION449 demonstrated a potential best-in-class profile.

Here’s a table on the company’s late stage assets and their global markets:

Molecule	Disease	Phase 3 data	Market
Tofersen	SOD1-ALS	2021	~1.4K patients in G7 countries
Eplontersen	ATTRv polyneuropathy	2022	>40K patients worldwide
Olezarsen	FCS	2023	~3-5K patients worldwide
Olezarsen	SHTG	2024	>3M patients in US
Donidalorsen	HAE	2024	>20K patients in US and EU
ION363	FUS-ALS	2024	~350 patients in G7 countries
Eplontersen	ATTR cardiomyopathy	2025	~300-500K patients worldwide
Pelacarsen	Lp(A) CVD	2025	>8M patients worldwide

Financials

IONS has a market cap of $4.93bn and a cash balance of $2.1bn. The company made $142mn in the previous quarter from SPINRAZA. They had a GAAP net loss of $65mn, and operating expenses were $199mn. At that rate they have a cash runway of many quarters.

Bottom Line

IONS is a science-heavy company which has had four trial failures in the last one year. Although individually each failure is mild, together they don’t present a pretty picture. Admittedly, the company has a few important catalysts up ahead, decent cash, and a low price. However, I think a lot of those upcoming catalysts are priced into the current valuation, and that makes me very wary of investing in IONS.