Ionis Pharmaceuticals (IONS) and Biogen (BIIB) recently announced a one billion dollar cash deal, including a $375 million upfront payment and another $625 million in IONS equity purchased at $54.34 per share, notes John McCamant, editor of The Medical Technology Stock Letter

This deal has been in the works as for many months in anticipation of the current collaboration was due to expire in September 2019. This is a rather strong vote of confidence by BIIB in the IONS antisense platform as they are clearly pleased with Spinraza, and which has exceeded $1 billion in sales already. 

Safety has been very important to Biogen and they referenced the safety for neuro conditions as a reason they struck the lucrative extension. The deal also includes improved economics with tiered royalties starting in the mid-teens up to 20% on net sales.

We would note that this is an improvement to the current royalty rate under the prior BIIB agreement with tiered royalty rates in the low to mid-teens.

Other positives this deal for IONS include the fact that BIIB has to opt-in earlier at the completion of IND-enabling studies compared to clinical POC under the current agreement. 

In addition, BIIB will assume all development responsibilities at the identification of the product candidate stage and will be responsible for and pay for non-clinical toxicology studies, clinical development, manufacturing, and commercialization. IONS will also receive up to $270 million in milestone payments per program skewed toward late-stage events.

The drug development candidates already known are: SOD1-Rx (ALS), C9-Rx (ALS) and MAPTRx (Alzheimer’s).  Disease areas under the agreement include dementia, neuromuscular diseases, movement disorders, ophthalmology, diseases of the inner ear, and neuropsychiatry. 

This is an excellent deal for IONS as BIIB is one of the world’s leaders in neurology and is strong validation of IONS’ cutting edge antisense drug development platform. Their collaborations keep getting bigger and their terms better. IONS is a BUY under $55 with a target price of $70.

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