Ionis Pharmaceuticals (IONS), previously known as ISIS Pharmaceuticals (ISIS), has been a leader in the RNA-targeted therapeutic space for over 26 years. The name was changed in December 2015. The company is focused on bringing its late-stage drugs to the markets and developing new high-value drugs that could become best-in-class treatments for life-threatening diseases.
The fundamental factors affecting stock prices and valuation include the performance of existing products, new and existing collaborations, and other factors including the results of clinical trials and product approvals. The series covers the performance of the existing product as well as other factors driving revenues for the company for a better understanding of each of these drivers.
Generally, the preferred valuation multiples are forward price-to-earnings multiples and forward EV-to-EBITDA multiples. However, as Ionis reported a net loss in its recent earnings due to variations in timing for licensing fees and milestone payments from its collaborations, the above multiples are negative. So we will consider the forward EV-to-revenues multiple for valuations.
As per the data on September 19, 2016, the company is trading at a forward EV-to-revenue multiple of 11.9x, as compared to the industry average of 6.7x. Other competitors like Ariad Pharmaceuticals (ARIA), Innoviva (INVA), and Medivation (MDVN) are trading at forward EV-to-revenues multiples of 11.9x, 9.6x, and 12x, respectively.
Ionis’s stock value has fallen 42% over the last 12 months. Analysts estimate that the stock has the potential to return ~27% over the next 12 months. Analysts’ recommendations show a 12-month target price of $40.22 per share compared to the last price of $31.64 per share as of September 19, 2016. 36% of the analysts recommend a “buy,” 57% of the analysts recommend a “hold,” and 7% of analysts recommend a “sell,” according to Bloomberg. Changes in analysts’ estimates and recommendations are based on changing trends in the stock price.
Investors can consider ETFs like the First Trust NYSE Arca Biotechnology Index Fund (FBT), which holds ~4.1% of its total assets in Ionis, in order to divest the risk.