Friday, April 20, 2018

Ionis Re-Sells Neuro Assets to Biogen for $500M and Improved Terms

This morning, Ionis Pharmaceuticals rattled my world by announcing an update to its neuro parnership with Biogen.  After recovering from a shock reaction thinking that $6B market cap Ionis Pharmaceuticals had sold the rest of its crown jewels in the neurological space for $500M and little more (upfront and premium paid by Biogen for the stock consideration), I noticed that this was merely the renewal of an earlier partnership that was about to expire in 2019.

Clearly, Biogen was eager to continue the partnership with sales gushing in from its first neurological disease partnership candidate, SPINRAZA for the treatment of spinal muscular atrophy, and other neuro antisense programs such as the one for Huntington’s Disease showing great clinical promise.  

As time was running out on the previous deal, Biogen wanted to buy itself additional time to be able to pick the right neuro antisense candidates.  In return for the 10-year extension, Biogen will now have to make its picks already by the end of IND-enabling studies instead of with clinical proof-of-concept.  This makes it likely that as Ionis can be expected to churn out IND-enabling studies one after another, quite a few candidates will slip by that deadline and become wholly owned by Ionis Pharmaceuticals.

Equally exciting is the fact that despite the earlier exercise term, instead of earning single digit to midteen royalty on drug sales, Ionis now stands to receive midteen to 20% royalties on sales.

On the downside, in the wake of the latest Akcea deal re-arrangements and this neuro deal extension which effectively shuts off other suitors to become owners of a significant part of the Ionis neuro franchise, we can wave good-bye to any hopes of a quick buy-out.  More likely, Ionis will largely remain a royalty play for the next 8-10 years by which time it surely will have a new CEO.  And then Biogen.

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By Dirk Haussecker. All rights reserved.

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