2 Drug Stocks Getting Destroyed

Despite an encouraging panel vote in May, the FDA declined to approve a drug from IONS and AKCA

Aug 28, 2018 at 10:21 AM
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Ionis Pharmaceuticals Inc (NASDAQ:IONS) and Akcea Therapeutics Inc (NASDAQ:AKCA) stocks are getting destroyed this morning, after a negative Food and Drug Administration (FDA) surprise. Specifically, despite an independent FDA panel voting in favor of the duo's drug, volanesorsen, back in May, the regulatory body declined to approve the familial chylomicronemia syndrome (FCS) treatment. At last check, IONS stock was down 13.5% to trade at $46.45, while AKCA stock has plummeted 25% to trade at $24.89.

In a joint statement, Ionis and Akcea said they are "extremely disappointed with the FDA's decision" -- and that disappointment has extended to analysts, too, with Wall Street battering IONS and AKCA with negative attention. No fewer than three brokerage firms slashed their price targets on IONS shares, including to $45 from $49 at Morgan Stanley, while Goldman Sachs reiterated a "sell" rating and $36 price target -- territory not charted since late 2016.

IONS stock is now back in the red on a year-to-date basis, and set to close beneath its 200-day moving average for the first time since Aug. 9. Today's plunge has the shares on track for their worst session since May 2016.

While the equity is on the short-sale restricted list today, several bears are likely cheering the FDA move. Short interest on Ionis surged more than 10% in the past two reporting periods, and now accounts for 12.5% of the stock's total available float.

Akcea Therapeutics stock is the biggest loser on the Nasdaq so far, and is set for its worst day since a late February earnings miss. The shares just touched an all-time high of $40.75 on Aug. 7, but have shed 39% since then. Nevertheless, AKCA stock remains 42% higher year-to-date.

In light of today's plummet, BMO and Stifel analysts slashed their price targets on AKCA to $34 and $25, respectively. As with Ionis, several short sellers are likely cheering today's bear gap, even with the equity on the SSR list. Short interest represents a whopping 51% of Akcea's total available float.


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