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Ionis (IONS) Q4 Earnings Top Estimates, Sales Lag, Stock Down

Ionis Pharmaceuticals IONS reported a loss of 37 cents per share for fourth-quarter 2022, much narrower than the Zacks Consensus Estimate of a loss of $1.06 and our estimate of $1.08 per share. In the year-ago quarter, the company had reported earnings of $1.41 per share.

The bottom line includes expenses related to the Akcea acquisition and restructured European and North American operations and other items. Excluding these non-recurring expenses, the loss per share was $1.18 per share versus a gain of $1.55 per share in the year-ago quarter.

Total revenues were $152 million in the fourth quarter, which missed the Zacks Consensus Estimate of $158.0 million but beat our estimate of $141.7 million. Fourth-quarter revenues were significantly less than $440 million in the year-ago quarter due to the recognition of a $200 million payment from partner AstraZeneca AZN to jointly develop and commercialize eplontersen in the fourth quarter of 2021.

Quarter in Detail

Ionis has licensed Spinraza to Biogen BIIB. Biogen is responsible for commercializing Spinraza, approved for treating spinal muscular atrophy, or SMA, worldwide. Ionis receives royalties from Biogen on Spinraza’s sales.

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Commercial revenues were $80 million in the fourth quarter, down 8% year over year.

Commercial revenues from Spinraza royalties were $67 million, down 2.9% year over, due to rising competition in international markets and currency headwinds.

Revenues from Tegsedi and Waylivra from distribution fees were $7 million compared with $9 million in the year-ago quarter. License and royalty revenues were $6 million in the quarter compared with $9 million in the year-ago quarter.

R&D revenues of $72 million were much less than the year-ago revenues of $353 million due to the payment from AstraZeneca for eplontersen in the year-ago quarter.

Adjusted operating costs were up 70.9% year over year to $335 million in the fourth quarter, mainly driven by higher R&D costs as the company rapidly advances its wholly-owned late-stage pipeline and due to increased go-to-market activities for eplontersen, olezarsen and donidalorsen.

Full-Year 2022 Results

Ionis total revenues were $587 million in 2022, down 27.5% year over year. Total revenues outperformed the company’s expectations of more than $575 million for the year.

The company reported a loss of $1.90 per share for 2022 compared to a loss of 20 cents in 2021.

2023 Guidance

Ionis issued fresh financial guidance for 2023. The company expects total revenues to be more than $575 million in 2023. The guidance was much less than the Zacks Consensus Estimate of total revenues of $731.5 million.

Its adjusted operating loss is expected to be less than $425 million.

Adjusted operating expense is expected to be in the range of $970-$995 million. R&D costs are expected to increase in the range of 20-25% year over year in 2023. SG&A costs are expected to increase approximately 25% to 30% year-over-year.

The company expects its cash and investment to be approximately $2 billion in 2023.

Ionis’ shares were down 3.7% on Wednesday in response to the mixed results and the disappointing revenue guidance for 2023. In the past year, Ionis’ shares have risen 17.5% in contrast to the industry’s decline of 11.7%.

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Pipeline Update

Several of Ionis’ pipeline candidates, wholly-owned as well as partnered, are in late-stage development. Some of these candidates are tofersen for SOD1-ALS (amyotrophic lateral sclerosis), pelacarsen for cardiovascular disease due to elevated Lp(a) levels, olezarsen for familial chylomicronemia syndrome (FCS) and severe hypertriglyceridemia (SHTG), eplontersen for TTR amyloidosis, and donidalorsen for hereditary angioedema (HAE).

Biogen, AstraZeneca and Novartis are its partners for tofersen, eplontersen and pelacarsen. Ionis and AstraZeneca filed a new drug application (NDA) seeking approval of eplontersen for polyneuropathy caused by hereditary TTR amyloidosis in December 2022. Ionis and AstraZeneca are also developing eplontersen for the treatment of cardiomyopathy in the phase III CARDIO-TTRansform study. Enrollment in the study is expected to be completed in 2023.

An NDA for Biogen/Ionis’ tofersen in SOD1-ALS is currently under FDA’s priority review and a decision is expected by Apr 25, 2023. An FDA advisory committee meeting is scheduled for Mar 22. In December 2022, the European Medicines Agency (EMA) accepted its marketing authorization application (MAA) for tofersen for SOD1-ALS.

In February, Ionis’ partner GSK GSK announced the initiation of two phase III studies on bepirovirsen for the treatment for patients with chronic hepatitis B virus (CHB). In November, GSK announced positive data from a phase IIb study on bepirovirsen in CHB. Data from the study showed that treatment with the GSK-partnered drug resulted in sustained clearance of hepatitis B surface antigen (HBsAg) and virus DNA for 24 weeks after the end of bepirovirsen treatment in CHB patients. GSK advanced the candidate into late-stage development based on the above phase IIb data. GSK licensed bepirovirsen from Ionis in August 2019.

Ionis is developing olezarsen for FCS and donidalorsen for HAE on its own in pivotal late-stage studies. It has completed enrollment in the phase III study for FCS, with top-line data expected in the second half of this year. In January, the FDA granted Fast Track designation to olezarsen for FCS. A phase III study on donidalorsen for HAE is ongoing and is expected to be completed enrollment in 2023. Management is advancing and expanding its wholly-owned pipeline to drive future revenue growth.

Zacks Rank

Ionis currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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