Analyst Note
| Karen Andersen, CFA |Biogen and Ionis announced mixed phase 3 data from the Valor study for ALS drug candidate tofersen on Oct. 17, as part of the annual meeting of the American Neurological Association, and we're not expecting to make any significant changes to our fair value estimates for either firm. As it stands, we include a 40% probability of approval for tofersen in 2022 in our valuation models, with probability-adjusted sales of $425 million (to Biogen) and royalties of $52 million (to Ionis) by 2030. While tofersen missed the key primary endpoint in this placebo-controlled study, which used the revised amyotrophic lateral sclerosis functional rating scale, there were trends toward reduced disease progression, particularly among patients who started treatment earlier. In addition, biomarkers appeared to point to the drug's ability to reach its target and plausibly slow neurodegeneration, as measured by reduced SOD1 levels and neurofilament. Biogen plans to expand its access program, which allows ALS patients to access the drug prior to approval, and will continue with the ongoing Atlas trial, which seeks to prevent clinical manifestation of ALS in presymptomatic patients diagnosed using SOD1 and filament levels. While we could see a path to approval for the drug, either with continued follow-up from the Valor study or with data from Atlas, we continue to see failure as slightly more likely. We see Biogen's broad neurology portfolio and pipeline as warranting a wide moat, and Ionis' antisense technology supporting a narrow moat. However, the failure of Ionis's Huntington's disease program and delays with its inhaled drug candidates could signal erosion of the firm's positive moat trend, and we're carefully watching for progress in the key areas of rare diseases and cardiology to find continued support for our trend rating.