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Why Is Ionis Pharmaceuticals (IONS) Down 5.8% Since Last Earnings Report?

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It has been about a month since the last earnings report for Ionis Pharmaceuticals (IONS - Free Report) . Shares have lost about 5.8% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Ionis Pharmaceuticals due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Q1 Earnings & Revenues Beat Estimates

Ionis reported first-quarter 2022 loss of 46 cents per share, narrower than the Zacks Consensus Estimate of a loss of 68 cents. In the year-ago period, the company had incurred a loss of 64 cents per share.

The bottom line includes expenses related to the Akcea acquisition and restructured European and North American operations, and other items. Excluding these non-recurring expenses, loss per share was 27 cents compared with 32 cents in the year-ago quarter.

Ionis reported total revenues of $142 million, up 26.8% year over year on higher R&D revenues, which made up for lower commercial revenues. Sales beat the Zacks Consensus Estimate of $129.0 million.

Quarter in Detail

Ionis earns commercial revenues, primarily royalty payments on net sales of Spinraza and R&D revenues from partnered medicines.

Commercial revenues were $87 million in the first quarter, down 15.3% year over year.

Commercial revenues from Spinraza royalties were $54 million, down 10% year over year. Revenues from Tegsedi and Waylivra from distribution fees were $6 million compared with $20 million in the year-ago quarter. License and royalty revenues were $12 million in the quarter compared with $5 million in the year-ago quarter.

R&D revenues of $70 million were higher than the year-ago revenues of $27 million and included $20 million received from partner AstraZeneca for its share of program costs for eplontersen, for which the companies had collaborated last December. R&D revenues also included $40 million received from Biogen for advancing some neurology disease programs.

Adjusted operating costs rose 8.8% year over year to $173 million in the first quarter, mainly due to higher R&D costs as the company rapidly advanced its wholly-owned late-stage pipeline. Ionis’ phase III studies doubled over the course of 2021 from three to six studies. The SG&A expenses decreased in the quarter on cost efficiencies realized from integrating Akcea and restructuring commercial operations.

2022 Guidance

Ionis expects total revenues to be more than $575 million in 2022. Its adjusted net loss is expected to be less than $275 million.

Ionis expects revenues in the second quarter to be similar to the first while in the second half, revenues are expected to be more weighted toward the back end of the year.

Adjusted operating expense is expected in the range of $825-$850 million. R&D costs are expected to increase in the range of 25-30% in 2022 from the 2021 level. SG&A costs are expected to be in line with the 2021 level.

Operating costs are expected to increase in the second quarter and through the rest of the year.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision flatlined during the past month.

VGM Scores

Currently, Ionis Pharmaceuticals has an average Growth Score of C, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Ionis Pharmaceuticals has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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