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What Ionis Investors Should Understand about Its Revenue Stream

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Sep. 20 2016, Updated 6:04 p.m. ET

Ionis’s revenues

As discussed earlier, Ionis (IONS) reported revenues of $38.5 million in its 2Q16 results. This translates to a 68% decline from the $120.4 million in 2Q15. Further, analysts estimate that revenues will increase by over 100% to $114.8 million in 3Q16.

The above graph shows the Ionis revenues over the last five years.

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Revenue performance

From the total revenues of ~$38.5 million for 2Q16, ~$15 million were received as upfront payment from Kastle Therapeutics for the acquisition of Kynamro. The revenues are reported under two segments:

  • research and development revenues under collaborative agreements
  • licensing and royalty revenues

Breakup of revenues

The research and development revenues under the collaborative agreements for 2Q16 were $22.4 million as compared to $119.7 million for 2Q15. The licensing and royalty revenues rose to $16.0 million for 2Q16 as compared to $0.8 million for 2Q15. The break-up of these revenues is as follows:

  • $15 million upfront payment from Kastle Therapeutics for global development and commercialization rights for Kynamro injection.
  • $2 million for progression in Nusinersen’s phase III study as well as Ionis-BIIB4RX received from Biogen (BIIB)
  • $21.4 million from amortization of upfront fees and manufacturing services performed for the company’s partners

Investors can consider ETFs like the iShares Nasdaq Biotech ETF (IBB), which holds ~0.6% of its total assets in Ionis, or the PowerShares Russell Midcap Pure Growth Portfolio (PXMG), which holds ~0.6% of its total assets in Ionis, in order to divest the risk. Apart from Ionis, IBB also holds 8.4% of its total assets in Amgen (AMGN), 8.2% in Gilead Sciences (GILD), 8.1% in Celgene (CELG), and 7.2% in Biogen (BIIB).

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