11/1/2016 6:53:58 AM
November 1, 2016
By Mark Terry, BioSpace.com Breaking News Staff
Speculation on who Biogen (BIIB) should buy, or who should buy Biogen, has been ongoing for some time. There were rumors in August that Merck & Co. (MRK) and Allergan (AGN) were considering buying the Cambridge, Mass.-based biotech company. And because Biogen’s multiple sclerosis (MS) franchise is sagging, investors are encouraging it to buy a company that will add some sizzle to its short-term pipeline and commercial portfolio. George Budwell lays out his thinking in The Motley Fool for why Biogen should acquire its research-and-development partner, Ionis Pharmaceuticals (IONS).
Now’s a good time to buy Ionis, Budwell argues, in part because it’s valuation is down, making it a good deal. At least part of that stock drop came when GlaxoSmithKline (GSK), which has a partnership deal with Ionis, chose to delay the launch of a late-stage clinical trial for IONIS-TTRRx, an antisense therapy for patients with transthyretin (TTR)-related amyloid cardiomyopathy. Some patients had low platelet counts after treatment and when Ionis conducted an internal review, found that another of its products, volanersorsen, for people with high triglyceride levels, also had some low platelet counts that were of concern.
Budwell writes, “The net result is that Ionis has shed nearly 60 percent of its value since the start of 2016 due to concerns that its antisense drug platform may be riddled with safety problems. The good news for perspective buyers and investors alike is that this steep share price decline doesn’t appear to be entirely warranted.”
The platelet drops were only seen in clinical trials that assessed those drugs, but not across its entire pipeline. In addition, its next generation of antisense drugs are more potent, which will allow them to be administered at lower dosages, which will presumably cut the likelihood of adverse side effects.
In an analysis of Ionis in September, Cory Renauer, writing for The Motley Fool, suggests that in the field of RNA-based therapies, Ionis is way ahead of its biggest competitors. Those competitors include Alnylam Pharmaceuticals (ALNY), Arrowhead Pharmaceuticals (ARWR) and Moderna Therapeutics.
One reason is that Ionis has 27 compounds in clinical-stage trials, and three in Phase III trials for rare diseases. The drug furthest along is nusinersen to treat spinal muscular atrophy (SMA), a leading genetic cause of infant mortality. Ionis’ partner in nusinersen is Biogen. Biogen’s option on the drug has already triggered a $75 million milestone payment to Ionis. If the drug is approved, Ionis could bring in up to $1.7 billion annually. And that’s only one of several agreements the two companies have.
Those two factors are the major arguments for Biogen to acquire Ionis. On the downside? Budwell writes, “Ionis’ management appears to firmly believe that this year’s staggering devaluation is the result of the market’s ill-conceived notion that its drug development platform is inherently flawed. So, they may not agree to a deal that offers even a 100 percent premium to its current share price in a buyout scenario.”
Even if the deal doesn’t go through, a nusinersen approval would be a huge benefit for both companies.
Budwell writes, “After all, a buyout would spare Biogen from having to dole out any of nusinersen’s long-tailed revenue stream to Ionis; Ionis comes with a monstrous pipeline of high-value drug candidates; and—perhaps the best part—an acquisition probably wouldn’t cost more than, say, $6 billion.”
Biogen shares are currently trading for $283.43.
Ionis stock is currently trading for $26.95.
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