Ionis Rallies as Deal-Needy Biogen Joins Top Holders in $1b Bet

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(Bloomberg) -- Ionis Pharmaceuticals Inc. is on track to shake off an 8.9 percent year-to-date decline after its pharma partner, Biogen Inc., became the second-biggest holder as part of a $1 billion deal.

The new 10-year accord expands an existing relationship for the two biotech companies that already collaborate on Spinraza, a treatment for a rare fatal disease known as spinal muscular atrophy. Earlier this month Novartis AG agreed to buy an Ionis peer developing a similar therapy, AveXis Inc., for $8.7 billion. AveXis’s experimental therapy may threaten Ionis and Biogen’s hold on the SMA market where they are currently the only players.

While Biogen holders have been waiting for the company to bolster its portfolio with new assets, investors may be looking for less risky later-stage drug candidates, RBC analyst Brian Abrahams writes in a note to clients. “Though the total cash outlay for a discovery deal may raise some eyebrows,” the move should be “more palatable” for Biogen investors since most of the cash is an equity investment. For Biogen, “we still think bigger things are to come,” he says.

The deals come as freed-up cash from U.S. corporate tax cuts has piqued investor interest in sector M&A. Cambridge, Massachusetts-based Biogen plans to buy 11.5 million shares at $54.34 each, a 19 percent premium to Thursday’s close, which would make the company the second largest holder in Carlsbad, California-based Ionis.

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