Monday, March 19, 2018

Ionis Pays to License TTR Drug

When it comes to reaping the financial benefits of its efforts, Ionis ranks at the bottom of the industry and last week provided a new low point in this ongoing saga.

Licensing drugs for commercialization purposes is normal in the biotech space, especially when a smaller company lacks the resources to do so.  In return, the licensor typically receives an upfront fee and other milestones in addition to a royalty on sales.

Ionis Pharmaceuticals has just broken with this sacred tradition.  In fact, it ended up giving $200M to Akcea Therapeutics for it to market TTR amyloidosis antisense drug candidate Inotersen for which regulatory approvals are expected this summer.  The two companies will share the profit/loss from the upcoming commercialization of Inotersen and the GalNAc-conjugated follow-on compound in early-stage development.

To put it in simple terms, Ionis is transferring billions of (stock) market value (à Alnylam’s ~$15 billions market cap largely rests on its TTR franchise) to Akcea in return for Akcea's recently established sales infrastructure for which it might have spent $50M.  As I’ve been saying all along: building commercialization capabilities does not involve magic and for orphan drugs certainly don’t require Big Pharma footprints.  All it requires is the will to just do it.

Unfortunately, Stan and his longtime followers at Ionis only feel comfortable playing in their early-stage sandbox and don't seem to really care about creating shareholder value.

No other takers?
Stating that they have just transferred billions of stock market value may also be partly wishful thinking. 

Last August, when GSK declined to license Inotersen, Ionis said that pharmaceutical companies had instantaneously started to line up to license the drug.  Then after nothing happened in the coming months, Ionis changed to wanting to keep the US to themselves and licensing rest of world.

And now this: it is ‘licensing’ the drug to its own spin-off company to which it already controlled more than 2/3 of the shares in addition to important veto powers regarding Akcea’s corporate development.

Ionis says that they were forced to give the nod to Akcea because the drugs were racing towards approval and other companies wouldn’t have been able to ready Inotersen for commercialization in time.  This, of course, doesn’t make any sense since why was Akcea more ready to do so?  Couldn’t Ionis have sent its TTR commercial team which it is transferring now to Akcea to just about any other company as well?   

Clearly, nobody was substantially interested in Inotersen and my guess is that this is not due to Alnylam’s Patisiran believed to have much better commercial prospects than Inotersen.  Instead, it is Alnylam's RNAi GalNAc compound which greatly limits the absolute value of both Patisiran and Inotersen as it looks like a vastly superior TTR knockdown drug (~quarterly subcutaneous dosing, much greater knockdown) and may be approved within the next 2 years already, much earlier than Ionis' GalNAc follow-on.  

1 comment:

Anonymous said...

Doesn't Ionis end up with 90% of the profits from this? 75% stake in AKCA x 40% of profits + 60% of profits paid in royalties to Ionis. It also increases its stake in Akcea and their existing portfolio. The cash paid for new shares should also end up at IONS after milestones are hit. Overall, in a few years' time we'll be able to look back and see that they kept 90% of the economic interest, got a bigger stake in the earlier pipeline they had given to Akcea at too low a price in the past, and got a big uplift in their overall Akcea stake / valuation as Akcea gets more scale / becomes much more viable. Or is this just rose tinted glasses?!

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