Shares of AveXis (AVXS) are slipping after Biogen (BIIB) and Ionis Pharmaceuticals (IONS) received FDA approval for Spinraza, their treatment for spinal muscular atrophy, or SMA. Following the news, Stifel analyst Katherine Breedis told investors she believes it is "highly unlikely" that AveXis' competitor drug, AVXS-101, could file for accelerated approval for the treatment of SMA.

FDA APPROVAL: The U.S. Food and Drug Administration approved Spinraza under Priority Review for the treatment of SMA in pediatric and adult patients. Spinraza was discovered and developed by Ionis and Biogen, and licensed to the latter who is responsible for future development, manufacturing, and commercialization. Spinraza is also the first and only treatment approved in the U.S. for SMA, a leading genetic cause of death in infants and toddlers that is marked by progressive, debilitating muscle weakness.

BEST SCENARIO: Following the news, Leerink analyst Geoffrey Porges raised his price target for Biogen to $368 from $355, noting that the label is "as broad as even the most optimistic patient or investor could have hoped for." Given the inclusion of every type, age and form of SMA in the label, the analyst said he expects many of the children and adolescents with the more severe and progressive forms of the disease to pursue treatment in 2017 and 2018. Leerink analyst Paul Matteis also raised his price target for Ionis Pharmaceuticals to $47 from $40 to reflect the SMA royalty after Spinraza's approval. Leerink has an Outperform rating on Biogen's shares, and a Market Perform rating on Ionis Pharmaceuticals' stock.

ACCELERATED APPROVAL UNLIKELY: Commenting on Biogen and partner Ionis' Spinraza approval for the treatment of all types of SMA with a "broad label," Stifel analyst Katherine Breedis told investors in a note of her own that she anticipates it will garner "rapid uptake" as it becomes commercially available within the next week or so. With Spinraza as the first approved therapeutic for treatment of SMA, the analyst believes it is "highly unlikely" AveXis' competitor drug, AVXS-101, could file for accelerated approval based solely on Phase I data in hand from Nationwide Children's Hospital given the FDA's desire to see evidence of reproducibility of clinical results in a multi-site trial as well as study results investigating a therapeutic that meets commercial-ready manufacturing standards. Furthermore, Breedis pointed out that some parents of SMA patients may have a preference for their child to receive an FDA-approved product versus an investigational gene therapy. While the analyst acknowledged that she does not know the timing of the commercial roll-out of Spinraza to leading centers for treatment of SMA, Breedis anticipates Spinraza may be on the market as much as 6 months prior to the start of enrollment of the pivotal study of AVXS-101 in SMA Type 1 and the Phase I study of AVXS-101 in SMA Type 2, which could present risk to those studies' enrollment timelines. She reiterated a Hold rating and $65 price target on Avexis' shares.

PRICE ACTION: In morning trading, shares of AveXis have dropped about 3% to $51.47. Meanwhile, Biogen's stock has gained 3% to $296.13 per share, and Ionis advanced over 4% to $55.76.