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Creating significant shareholder value, or giving away the store? This one is really hard to wrap my arms around. They seem crazy cheap. Spinraza is the real deal. I think NVS blew $8bn on Avexis. I doubt think their treatment will compare to Spinraza. Yet, IONS can’t get to $8bn w a $1bn cash on hand and 35 or 40 drugs in the type. And their drugs work. Question is, are they best in class? And, does management understand the economic side of things?

This BIIB deal looks like a pretty big vote of confidence in IONS neuron franchise. Just not sure. I could also look at it as a fairly tepid, low risk way to take a good look at the rest of the neuro portfolio.
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IONS keeps giving the value away so that they can remain and R&D shop, and most of their drugs have some sort of catches that make them difficult to market. All it takes is one or two, but of those one or two it is likely IONS will give away all the value and take their 10% royalties on profits (which is even a worse deal than 10% of revenues).

When ISIS starts wanting to take some risks, focus on a few drugs with real value, and want to take them to market themselves, with no worse than a 50/50 partner, then ISIS could get out of their rut.

Tinker
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Tinker
My response somehow ended up in the other thread. Want rewrite whole thing. But, royalty on Spinraza is 12.5% revenue, not earnings and can climb.
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The deal w BIIB is up to $270 million in milestones per drug plus royalty up to 20% revenue. And, I don’t know of a milestone payment these guys have missed.
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Milestone payments do not interest me. They never move the stock. Royalties on profits up to 20% do not interest me. If it is on revenue, let me know. It is most likely on profits. And "up to" means not likely, and most likely in low single digits. None of this moves the needle.

If you want Incyte like performance and valuation or NKTR, you have to take the risk and bring drugs to market that can fail but if they succeed it is a home run.

IONS has 0 home run opportunities at the moment. Instead of bringing every drug under the sun to market, IONS has to settle on 2 or 3 in its pipeline, that are worth the risk, and take the risk.

Tinker
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Btw that is what EXEL did. One drug, only one drug, is all it takes.

Tinker
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It is up to 20% on revenue. Last year they’re royalty on Spinraza was 12.5% of revenue, which I believe must have equated to around 40% of net profit. Sales were around $900 million and the orphan drug manufacturers usually bring about 25-30% to the bottom line. And, IONS has no associated expense related to their payment other than taxes.

Some our different levels of interest are based on the fact that I don’t like the binary nature of biotech. That is part of why IONS appeals to me. Much more interested to understand if this is a stock that at some point could deliver 20-25% for several years.

My only real concern remains the effectiveness of their drugs compared to any competitors. The drugs work, the safety issues seem to be under control and the drugs currently in the later stages are not even newest generation.

I don’t know. I said I was going to hold my 100 shares and then I bailed.
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Ions may not have the homerun, but IONS is of a different sort. It’s pipeline is so loaded that it can continue to do what it does and continue to grow earnings. That is what a more mature biotech does, but that is what IONS is doing. If it creates shareholder value, more power to it.


I prefer a biotech, or any business at that matter, that can focus on a few, or even one thing, and do it better than anyone else. For IONS that means picking a few drugs and bring them wholly owned or 50% owned at least, to market, instead of brining 30 drugs to clinical and getting a small cut of each.

Different investing scenarios. My preference is the latter, if the former works for shareholders than so be it.

Tinker
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