Why Ionis Results Today Support A Pair Trade With Alnylam

Following Ionis Pharmaceuticals Inc IONS's announcing positive results in a late-stage study of its anti-sense oligonucleotide, inotersen, dubbed IONIS-TTRRx, in patients with transthyretin familial amyloid polyneuropathy, or TTR-FAP, Chardan explained how the results support a pair trade with Alnylam Pharmaceuticals, Inc. ALNY.

What's Pair Trade?

A pair trade is strategy of offsetting the risk in going long on a security by taking a short position in another higher correlated security. Usually, traders go long on an underperforming instrument, while shorting the outperformer. Profit realized through the use of the strategy is the price change between the two securities.

Source: Y Charts

Trial And Results

The results of Ionis' study showed that inotersen met both primary endpoints, achieving a statistically significant benefit in both the modified neuropathy impairment score and the Norfolk quality of life questionnaire-diabetic neuropathy score compared to placebo over fifteen months.

Safety Issues

Analysts Madhu Kumar and Gbola Amusa noted that three serious adverse events, or SAE, of thrombocytopenia occurred in inotersen-treated patients, with one patient dying from an intracranial hemorrhage. One additional patient discontinued due to a non-serious thrombocytopenia and four additional patients discontinued due to renal events; two because of a predefined renal stopping rule and two because of renal SAEs, one of which being chronic renal insufficiency, the analysts added.

The analyst pointed to the fact that enhanced platelet and renal monitoring was implemented during the study to support early detection and management of the safety issues, with more than 80 percent of patients completing NEURO-TTR.

"Today's results of multiple platelet and renal-related SAEs, including a patient death due to intracranial hemorrhage, are consistent with these safety concerns worsening over longer ASO treatment courses," the firm said, giving its take on the safety issues.

Reiterating Pair Trade Between Alnylam, Ionis

In light of the efficacy signal observed in NEURO-TTR de-risking Alnylam's phase III APOLLO trial for TTR RNAi drug patisiran, Chardan raised its price target for Alnylam to $110 from $95, reflecting 16 percent upside.

The firm reiterated Alnylam as a top pick for 2017, while also reiterating its pair trade between Alnylam and Ionis, going long on Alnylam and shorting Ionis.

Rating/Price Target

Chardan rates Alnylam a Buy and has a $110 price target for the shares.

At the time of writing, shares of Ionis Pharma were slipping 11.60 percent to $41.62, while Alnylam Pharma was rallying 15.79 percent to $65.73.

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