Shares of Ionis Pharmaceuticals (IONS) are under pressure on Tuesday after the company announced that its partner Roche (RHHBY) decided to discontinue dosing in the Phase 3 GENERATION HD1 study of tominersen in manifest Huntington's disease. While Cowen analyst Yaron Werber argued that the halt removes an overhang as expectations were low to begin with, several of his peers lowered their price targets on Ionis shares as they view the development as "disappointing."
HD PROGRAM HALT: Ionis Pharmaceuticals announced that its partner Roche has decided to discontinue dosing in the Phase 3 GENERATION HD1 study of tominersen in manifest Huntington's disease. The decision was based on the results of a pre-planned review of data from the Phase 3 study conducted by an unblinded Independent Data Monitoring Committee. While there were no new or emerging safety signals identified for tominersen, the iDMC made its recommendation based on the investigational therapy's potential benefit/risk profile for study participants, the company said. Participants will continue to be followed for safety and clinical outcomes. In addition, dosing will be paused in the open-label extension study of tominersen while data are carefully analyzed to inform next steps on this study. Roche also stated that the Phase 1 PK/PD study of tominersen and Roche's observational HD Natural History Study will continue. Roche has stated that once full data from the studies are available and analyzed, Roche will share learnings and future plans with the community.
HD PROGRAM HALT REMOVES OVERHANG: Following the news, Cowen analyst Yaron Werber told investors that he believes it removes an overhang as expectations were low to begin with and that this news will allow Ionis to focus on more promising catalysts in its pipeline. Werber maintained his Outperform rating on Ionis Pharmaceuticals shares.
'DISAPPOINTING' OUTCOME: Meanwhile, RBC Capital analyst Luca Issi lowered the firm's price target on Ionis Pharmaceuticals to $65 from $76 but kept an Outperform rating on the shares. The decision by the company's tominersen partner Roche to discontinue its Phase 3 study in Huntington's Disease was a "disappointing" outcome," but an Outperform rating is still as warranted as the indication was never "central" to his investment theses for Ionis, the analyst told investors in a research note.
Also keeping an Outperform rating on the shares, BMO Capital analyst Do Kim lowered his price target on Ionis shares to $76 from $90. The analyst maintains a positive view on Ionis as its lead candidates could change the course of multiple rare diseases, with near-term focus to be on Spinraza quarterly sales, Tofersen clinical development, the Tegsedi launch, and data updates from its "extensive pipeline."
On the sidelines, Piper Sandler analyst Tyler Van Buren lowered the firm's price target on Ionis Pharmaceuticals to $45 from $55 and kept a Neutral rating on the shares. While the tominersen program is not terminated at this point, Van Buren noted that he has to assume that the OLE and Phase III dosing halt will result in the shuttering of this iteration of the program. Acknowledging that this development would be "very unfortunate," the analyst believes it is prudent to remove the opportunity from his model.
Barclays analyst Gena Wang also lowered the firm's price target on Ionis Pharmaceuticals to $47 from $52, while keeping an Equal Weight rating on the shares after the company announced a trial stop for the Phase 3 GENERATION-HD1 study for tominersen in Huntington's disease based on a risk/benefit analysis by independent data monitoring committee. While the analyst had low expectations, Wang acknowledged that the early stopping was a surprise.
MIXED READTHROUGH: Commenting on the news, Truist analyst Joon Lee told investors that he believes the setback has some mixed readthroughs to Wave Life Sciences' (WVE) upcoming Huntington's disease topline data readouts. Given the analysis was not triggered by a new safety issue and was conducted as part of a pre-planned assessment for a devastating disease with no alternative, Lee thinks the termination of Wave's competitor's Phase 3 study is likely due to lack of efficacy, not safety issues. The analyst believes the drug failure may be due to either poor bioavailability, wtHTT knockdown or both.
Lee added that Ionis' update "does send some jitters" as he awaits Wave's Phase 1/2 HD program by the end of March 2021. However, he noted that there is a "key difference" between the two approaches taken by Ionis and Wave, which leads him to view that competitor failure as not a direct readthrough to upcoming data from Wave. He has a Buy rating and a $27 price target on Wave Life Sciences' shares.
PRICE ACTION: In afternoon trading, shares of Ionis have dropped about 21% to $43.92, while Roche's shares trading in New York have slipped about 3% to $41.38. Shares of Wave Life Sciences have also slid about 20% to $8.47. Also researching Huntington's disease, Uniqure (QURE) and PTC Therapeutics (PTCT) have dropped 9% and 8%, respectively.
uniQure
-2.77 (-8.01%)
Ionis Pharmaceuticals
-11.33 (-20.37%)
Roche
+ (+0.00%)
Wave Life Sciences
-2.165 (-20.56%)
PTC Therapeutics
-4.5 (-7.88%)