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Ionis Stock Makes Another Misstep; Can It Regain Its Footing?

Biogen (BIIB) and Ionis Pharmaceuticals‘ (IONS) approach to Lou Gehrig’s disease flopped over the weekend, leading IONS stock to collapse to a five-year low Monday.




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The duo tested their drug, tofersen, in patients with amyotrophic lateral sclerosis, also known as ALS. Patients with this disease lose muscle control due to dysfunction in the nerve cells of the brain and spinal cord.

Tofersen-treated patients didn’t improve enough to deem the study a success, and IONS stock tumbled. SVB Leerink analyst Mani Foroohar says the data release marks “another misstep” for one of Ionis’ partnered programs in central nervous system disorders. Previously, Roche (RHHBY) discontinued a study of Ionis’ Huntington’s disease treatment.

“For Ionis, we expect shares will struggle to find upward momentum as long as the company remains without a highly visible, late-stage asset in a large revenue indication to provide an anchor for the pipeline,” Foroohar said in a note to clients.

In early trading on the stock market today, Ionis shares plummeted 16.8% near 29.20. Biogen stock skidded 3% near 272.70.

IONS Stock Dives On Misstep

Patients showed improvement in function — as measured by a scale for ALS assessment — but the results weren’t strong enough to be statistically significant.

Biomarker data also suggested the drug was, in fact, engaging the mutated gene responsible for patients’ disease. Further, patients who received tofersen showed greater declines in a marker of neurodegeneration, known as neurofilament, than those who received the placebo.

But the drug also carried some side effects. Serious adverse events occurred in almost 6% of patients who received tofersen vs. none in the placebo group, Needham analyst Joseph Stringer said in a report. Those included inflammation in the spinal cord, an infection called meningitis, a disease of the lumbar spinal nerve root and other nervous system disorders.

Stringer kept his buy rating and 94 price target on IONS stock. But he removed tofersen from his expectations for Ionis’ financial future.

Biogen Unlikely To File For Approval

RBC Capital Markets analyst Luca Issi said the drug has an “undeniably modest effect.” Biogen will ultimately make the decision on whether to file for approval. But that’s a “long shot,” Issi said in a report.

Biogen and Ionis are targeting a specific mutation that impacts just 2% of ALS patients.

“Given this is a very small subset of a devastating disease and that data showed a modest benefit consistent across endpoints (study goals), we cannot rule out filing as a possibility,” he said. He sees a 5%-10% chance of filing, assuming an ongoing study turns out positive.

Issi has an outperform rating on IONS stock.

Follow Allison Gatlin on Twitter at @IBD_AGatlin.

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