Anticipated Drug Launches Will Shift Biotech Company To Commercial Stage

Key Takeaways

• Ionis is set to boost revenue through first-mover advantage with TRYNGOLZA and other product launches targeting unmet medical needs.
  
• Significant growth is expected from partner and independent product launches, enhancing diversification and potentially leading to positive cash flow.
  
• The launch of TRYNGOLZA faces risks from an unidentified patient base and increased expenses, potentially impacting revenue, while reliance on partnerships adds earnings variability.

Catalysts

A commercial-stage biotechnology company, provides RNA-targeted medicines in the United States.

• The launch of TRYNGOLZA for familial chylomicronemia syndrome (FCS) is expected to drive revenue growth due to its status as the first approved treatment for this condition, offering first-mover advantage and targeting an underdiagnosed patient population.
  
• Over the next three years, Ionis plans to independently launch three additional products, including donidalorsen for hereditary angioedema and olezarsen for severe hypertriglyceridemia (sHTG), which could lead to substantial revenue growth driven by addressing unmet medical needs.
  
• Revenue growth is also anticipated from four late-stage partnered programs set to launch within the next three years, including pelacarsen for cardiovascular disease and eplontersen for ATTR cardiomyopathy, broadening treatment options and diversifying revenue streams.
  
• Ionis is poised for a shift to commercial revenue as a fully integrated commercial-stage biotech company. The anticipated launches of TRYNGOLZA and donidalorsen are projected to increase commercial revenues significantly in the coming years.
  
• The substantial pipeline, with seven Phase III data readouts planned by the end of 2026, including new indications for existing drugs and novel therapies, positions Ionis for sustained revenue growth and potential positive cash flow.

Ionis Pharmaceuticals Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Ionis Pharmaceuticals's revenue will grow by 19.8% annually over the next 3 years.
• Analysts are not forecasting that Ionis Pharmaceuticals will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate Ionis Pharmaceuticals's profit margin will increase from -64.4% to the average US Biotechs industry of 19.5% in 3 years.
• If Ionis Pharmaceuticals's profit margin were to converge on the industry average, you could expect earnings to reach $235.6 million (and earnings per share of $1.21) by about March 2028, up from $-453.9 million today.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 59.7x on those 2028 earnings, up from -11.7x today. This future PE is greater than the current PE for the US Biotechs industry at 20.1x.
• Analysts expect the number of shares outstanding to grow by 7.0% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 6.83%, as per the Simply Wall St company report.

Ionis Pharmaceuticals Future Earnings Per Share Growth

Risks

• There is a risk with the TRYNGOLZA launch due to the fact that the vast majority of the familial chylomicronemia syndrome (FCS) population remains unidentified and undiagnosed, potentially impacting initial sales and revenue growth.
  
• The high single-digit percentage increase in operating expenses projected for 2025, while revenues are expected to be more than $600 million, indicates potential pressure on net margins if revenues do not meet expectations.
  
• The market for severe hypertriglyceridemia (sHTG) is large, but many patients are not achieving desired triglyceride reduction with current options, suggesting increased competition and uncertainty on the expected revenue impact from olezarsen.
  
• The planned increase in sales and marketing expenses related to multiple anticipated product launches, without guaranteed approval or market success, could negatively impact operating margins.
  
• The reliance on royalties and milestone payments for a significant portion of revenue, such as from partnerships for SPINRAZA and AstraZeneca’s involvement in the CARDIO-TTRansform study, introduces a risk of variability in earnings based on partner company performance and strategic decisions.

Valuation

• The analysts have a consensus price target of $59.502 for Ionis Pharmaceuticals based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $78.0, and the most bearish reporting a price target of just $37.0.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $1.2 billion, earnings will come to $235.6 million, and it would be trading on a PE ratio of 59.7x, assuming you use a discount rate of 6.8%.
  
• Given the current share price of $33.34, the analyst price target of $59.5 is 44.0% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.