Here's Why Ionis Pharmaceuticals' Steep Sell-off Was Overdone

Go back to July 8, 2026. Ionis Pharmaceuticals (NASDAQ: IONS) was on a roll. The biotech stock had more than doubled over the previous 12 months. Its future looked bright. But one day later, everything changed.

Ionis lost more than 20% of its value on July 9. And that was just the beginning of the sell-off. Even with a rebound in recent days, the stock remains roughly 30% below its peak in early July.

Was Ionis Pharmaceuticals' sell-off overdone? I think so.

Image source: Getty Images.

Missing the bigger picture

I wouldn't say that Ionis' steep plunge was much ado about nothing. The company experienced a double-whammy on July 9.

Eplontersen, an experimental therapy initially developed by Ionis, missed its primary endpoint in a Phase 3 study targeting transthyretin amyloid cardiomyopathy (ATTR-CM). Late-stage clinical flops can be especially painful. This failure came on top of more bad news on the same day related to tominersen, a drug developed by Ionis for the treatment of Huntington's disease.

Both clinical setbacks were blows to Ionis, especially the eplontersen failure. However, the impact to the company was cushioned by the fact that these were partnered programs -- eplontersen with AstraZeneca (NYSE: AZN) and tominersen with Roche (OTC: RHHBY). The real stars of Ionis' growth story are its fully owned therapies.

Sales for heriditary angioedema drug Dawnzera soared 63% sequentially in the second quarter of 2026. This momentum should continue as the drug is launched outside the U.S.

Tryngolza won U.S. Food and Drug Administration (FDA) approval for treating severe hypertriglyceridemia (sHTG) in June. It's also gaining momentum in its initial approved indication of familial chylomicronemia syndrome (FCS). Ionis projects peak sales for Tryngolza of more than $3 billion.

The FDA is also scheduled to announce an approval decision for zilganersen in the treatment of Alexander disease by Sept. 22, 2026. There are currently no approved disease-modifying treatments for the rare neurological condition.

Many investors are missing the bigger picture with Ionis -- a much more encouraging picture than its stock performance reflects. Wall Street isn't, though. The consensus 12-month price target for the stock is roughly 46% higher than the current share price.

A reality check

If I'm right that Ionis' steep sell-off was overdone, does that mean the stock will surge in the near future? Not necessarily. The reality is that it can take a while for investors to recognize that a stock is attractively valued.

Some investors won't view Ionis' valuation as attractive even after its sharp decline, with its forward earnings multiple at nearly 91. However, growth stocks with exceptional opportunities usually sport premium valuations. I think that Ionis is in this group.

The biotech stock's sell-off is overdone, in my opinion. Forward-looking investors should be able to make money over the long run buying this beaten-down stock on the dip.

Keith Speights has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends AstraZeneca Plc and Ionis Pharmaceuticals. The Motley Fool recommends Roche Holding AG. The Motley Fool has a disclosure policy.