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Ionis Pharma (IONS) Urges Investors to Reject the Below-the-Market Offer By TRC Capital

8/24/2017 5:34:38 AM

Ionis Pharma Urges Investors to Reject the Below-the-Market Offer By TRC Capital
August 24, 2017
By Mark Terry, Breaking News Staff

Recently, TRC Capital Corporation of Ontario made an unsolicited min-tender offer to Carlsbad, Calif.-based Ionis Pharmaceuticals (IONS). Ionis released a statement urging shareholders to reject the offer.

The U.S. Securities and Exchange Commission (SEC) says that “’Mini-tender’ offers are tender offers that, when consummated, will result in the person who makes the tender offer owning less than five percent of a company’s stock. The people behind these offers—also known as ‘bidders’—frequently use mini-tender offers to catch shareholders off guard. They count on investors jumping to the conclusion that the price offered includes the premium usually present in larger, traditional tender offers. But with mini-tender offers, the price offered may actually be below the market price.”

TRC offered to buy up to 2.5 million Ionis common shares at $44.88 per share in cash. Ionis notes that the offer price is 4.47 percent lower than the $46.98 closing share of the stock on August 18, 2017, the day before the offer. The 2.5 million shares represent 2.01 percent of common stock outstanding as of August 21.

Ionis focuses on RNA-targeted drug discovery and development. It has three pipeline drugs, Spinraza, Ionis-TTRRx and volanesorsen. Recently, on August 11, the company announced that GlaxoSmithKline (GSK) had declined its options on both inotersen and IONIS-FB-Lrx, returning rights back to Ionis. Much of this has to do with GSK making major structural and R&D changes, killing more than 30 preclinical and clinical programs.
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Inotersen is designed for patients with TTR amyloidosis (ATTR), and the company is pushing forward with the drug and hopes to file for approval in the U.S. and Europe this year. It recently completed the Phase III NEURO-TTR trial of inotersen, where it met both primary clinical endpoints of neurological disease progression and quality of life in patients with hATTR-PN.

IONIS-FB-Lrx is in development to treat complement-mediated diseases. Earlier this year, Ionis completed a Phase I trial where the drug showed dose-dependent reductions in plasma factor B (FB) and showed safety and tolerability that supported more clinical development. The company expects to start the first Phase II trial of the drug in patients with dry age-related macular degeneration (AMD) later this year, and potentially in other indications next year.

Ionis doesn’t endorse TRC Capital’s min-tender offer and recommends stockholders don’t tender their shares in response to it.

The SEC notes that “Bidders in mini-tender offers limit the offer to five percent or less so that they do not have to comply with many of the investor protections that are in place for larger tender offers made by bidders whose total ownership after the offer, when added to their holdings before the offer, would exceed five percent….Investors who surrender their shares without fully investigating the offer may be shocked to learn that they cannot change their minds and withdraw. In the meantime, they’ve lost control over their securities and may end up selling at below-market prices.”

Ionis stock is currently trading at $48.88. The shares’ 50-day moving average is $51.26 and its 200-day moving average is $47.17. On August 17, Evercore ISIS Group gave the stock an “Outperform” rating, and on August 14 BMO Capital kept its rating at “Outperform” and raised the price target from $67 to $69.

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