Ionis Pharmaceuticals, Inc. (IONS) Earnings Call Transcript & Summary

Let's go ahead and get started. Thank you, everyone, for attending the last morning of the Cowen Health Care Conference. And thanks for joining us at the Ionis fireside chat. I'm covering analyst, Ritu Baral with Cowen. And with us is CEO Brett Monia. As many of you know, Brett assumed the CEO position after being Chief Operating Officer?

Yes. For the last couple of years.

For the last few years, but he assumed the CEO position on January 1 of this year as Stan has moved to the Chairman role, as Brett and I were just discussing. I wanted to start off and give you a few minutes to review where you guys are. And maybe talk about your philosophy as CEO and how it might differ from what people have known Ionis to be.

Okay. Well, thanks, Ritu, and thanks -- great turnout. Third day of the conference. I appreciate everybody being here. And yes, I am the CEO of Ionis. I've been with the company since the beginning. For those that don't know me, I'm actually a scientist and a drug developer. And really, it was just the last couple of years that I got much more involved in the business functions of the company as a Chief Operating Officer. And then moved into the CEO role on January as Ritu mentioned. These are very exciting days at Ionis. We essentially created a new sector in the biotech industry called RNA-targeted therapeutics. We pioneered it. And we've led the way, and we continue to lead the way for RNA therapeutics today. 2019 was a great year, and we're building on that momentum in 2020 already with already many great successes. And I believe the future of Ionis is incredibly bright this year, and for many, many years to come. As I think most of you know, we've had 3 drug approvals over the last few years: SPINRAZA, TEGSEDI and WAYLIVRA. Those launches are -- and the commercialization of those products is well underway. We have a pipeline now of more than 40 medicines in development, all of which are progressing very, very well. Right behind those commercial products, we have 5 Phase III programs in progress for drugs that have the potential to be transformative in nature for 4 different medicines for broad and rare disease indications. The pipeline is broad behind that as well, as I mentioned. And based on that pipeline and those Phase III programs, we're actually projecting, which I think is really remarkable, 10 or more new drug applications by 2025, starting potentially next year. So you can see that we're on the verge of a tidal wave of potential new drug approvals over the next few years at Ionis. In addition, a very important priority for me, which is to address your question about some things that are a little bit new, is to create and build and expand the Ionis-owned pipeline. As many of you know, we have been incredibly successful at partnering. Many companies want to partner with our -- with Ionis, with our -- to get access to our technology for broad indications and rare indications as well. And those partnerships are doing very well. The economics we command in those partnerships is increasing substantially, exponentially compared to earlier deals we've done in the past. But today, we're growing the pipeline that Ionis owns. And it's expanding rapidly, including neurological diseases, which is an area that we're particularly excited about, and we're building our commercial capabilities at Ionis as well to maximize the value of each of those Ionis-owned medicines in the future. And then finally, I'll just say that, in addition to the pipeline in the commercial products, the technology continues to advance, with many new developments with new chemistries that are opening up the scope of antisense today, new organ systems, new cell types, new routes of delivery, new mechanisms of action that I think will continue to expand the scope of our pipeline and the reach of the technology. So to finish on your question about what will remain the same, what will be a little different, Ionis has always been known for and will continue to be a focus for the company on scientific innovation. We've -- like I said, we led the way in creating this new sector, which is -- which I think is the most -- one of the most exciting sectors in biotechnology. And we'll continue to innovate. We'll continue to focus on science and to deliver medicines to patients year over year over year coming. What is new is now to take full advantage of our capabilities to build our -- the Ionis-owned pipeline. And you're going to see that pipeline grow, as I mentioned earlier, extensively, and you're going to see us build our commercial capabilities to maximize the value of each of those medicines to Ionis, its shareholders, to patients as well as our -- as well as continuing to partner where it makes sense, where it makes sense to partner.

So this -- sorry, this move to commercial, Brett, is that just maybe a change in the Ionis sort of corporate personality and sort of the next stage of development? Is it sort of logical evolution of the company? Or is it sort of a change in the commercialization landscape such that it now actually makes sense?

I think it's much more of an evolution of the company than a change. Remember, as I mentioned earlier, we pioneered this new area called RNA therapeutics. And it took decades to optimize it and to validate it. Today, it's validated. Today, we've made the turn, and we're not having to prove that the technology works and understand where -- how to apply the technology to maximize the value it brings. That's behind us.

So whereas before you were happy to offload the risk [ where it appears... ]

We had to offload risk while we continue to innovate and invest in the technology to demonstrate and to bring it to the finish line to make -- show its efficacy or to show its -- that it's beneficial to patients and can produce meaningful products. The other aspect of this is the financial strength of the organization, right? It takes a significant capital to invest in your own pipeline and to build commercial capabilities to implement commercialization. Today, Ionis has been net profitable 4 years plus running next year. Last year alone, we had over $1 billion in revenue from both commercial and our -- from our partners. And we continue to be -- plan to be net profitable going forward. But the financial strength we have and the validation of the technology behind us, I'd call it more of an evolution that now we're moving into this new stage for the company.

So let's start with what you mentioned to your current pipeline. You've been really expanding the neuro pipeline. It's been a main focus. Can you talk to us a little bit more about what's covered in the Biogen collaboration. What's being worked on in the Biogen collaboration. Obviously, it's critically important for them. On the earnings call, you mentioned that the MAPTRx program is part of the partnership. They saw interim data, they like what they saw and they'll move it forward. When could we see that data? And can you talk about the other Biogen programs?

Sure. But if I could, I'd like to just talk about our neuro program a little bit more broadly, and I can get into Biogen and MAPT tau. I'm -- for the last 10 years, we have been optimizing the delivery of antisense medicines to the CNS. And I believe that we have created the premier program in neurodegenerative disease drug discovery with drugs like SPINRAZA, and drugs coming for ALS, multiple drugs now coming for ALS with proof-of-concept already achieved in the clinic. Huntington's disease. And then your broad indications like Alzheimer's disease and Parkinson's disease, whereas so many other companies have failed in neurodegenerative diseases -- and we all know what a large unmet medical need there is in neuro. I believe we've really cracked the code in delivering and we'll continue to deliver medicines to patients for this area of tremendous unmet medical need. And that's both with partners, Biogen and also Roche but also the Ionis-owned pipeline as well. The Biogen relationship is a fantastic relationship that has evolved over many years. We started with SPINRAZA and that has led to collaborations in ALS. And now more broadly for neurodegenerative diseases. The collaboration is one in which they get access today with very attractive economics now built in to medicines that come forward for neurodegenerative diseases as a therapeutic area. Biogen is -- however, has a requirement to make a decision on each drug before we even have a drug when we actually have an idea in research. And if those drugs -- and if they do not advance those drugs, if they don't accept them with a significant milestone payment, they revert to Ionis. And that's how we build a neurodegenerative disease pipeline at Ionis because there are certain areas that are just not in Biogen's sweet spot. It's an excellent partnership, one in which highly collaborative and incredibly productive. We have about half a dozen drugs in the clinic right now in the neurological space. And I think, preclinically, we have about 10. And there's more coming. Just to show you the impact as -- illustrate the impact we're going to have in neurodegenerative diseases for years to come. MAPT tau is a unique mechanism to target tau intracellularly that we're pursuing with Biogen. It's behind multiple ALS drugs, I mean -- and of course, SPINRAZA as well. But it is for a broad indication in Alzheimer's disease. Based on blinded data, last year, blinded data in which safety, tolerability, changes in MAPT tau levels in CSF could be assessed. Biogen licensed the program early. And has now -- is now...

That data is still blinded?

That data is still blinded. And it's -- and we'll be -- the Phase II study will read out next year. And Biogen, I'm sure will be presenting it at an appropriate medical meeting next year on MAPT tau.

So they opted in basically on the PK/PD efficacy and the knockdown and the safety rather than -- they clearly believe in the mechanism.

They clearly believe in the mechanism. And unlike other mechanisms like antibodies, which target extracellular tau, of course, what we're targeting is intracellular tau, and which includes phospho tau, phosphorylated tau protein, which is a novel mechanism and a mechanism that we and they believe is superior to extracellular targeting of tau. But yes, they looked at blinded data. And based on -- they were encouraged enough to license the program early and take it over.

Can you walk us through where your LRRK2 is and your C9Rx for ALS as well?

Of course, happy to. So I would like to start with C9 because there's not a lot I could say right now about Parkinson's because it's so early on. We have a full court press on ALS, Lou Gehrig's disease with Biogen. Our SOD1 program, which is in Phase III, is deferred list advanced. And in after only 3 months of treatment of patients with SOD1 mutations in ALS, the results were very encouraging. That compared to placebo, patients were stabilizing, whereas, patients on placebo were unfortunately degenerating. Their disease was rapidly degenerating after only 3 months. Based on this data, they advanced this program into Phase III, and that data is due to read out next year. Right behind SOD1 is another genetic form of ALS. That's due to mutations, an expansion, a CAG expansion in a gene called C9ORF, open reading frame. That study like the SOD1 study was -- like the SOD1 study, what we reported last year, is in Phase II development in patients with C9 mutations. And that Phase II study is due to also read out next year. So next year is going to be a big year for Ionis and our partner Biogen for ALS. In addition, we have moved a third drug for ALS into development. We haven't disclosed the target or the timing yet for sporadic ALS. Remember, there are multiple causes of ALS. There's the genetic causes like SOD1, C9, FUS mutations. And then there's the sporadic causes, which are the broad indications for ALS. And we're working on multiple targets with Biogen for sporadic. The first one is now in development, starting with toxicology studies. And then the last point I'll make about ALS is both SOD1 and C9 have the potential to work in broader indications as well as the genetic forms of ALS. SOD1 has been linked. There's been some data supporting its role in sporadic ALS, and we're considering options to develop it for sporadic as well as SOD1. And C9 has been linked directly to dementias such as frontotemporal dementias and other form of dementias, and we're working through potential plans to develop C9 for that indication as well. LRRK2 is a genetic -- is genetically linked to Parkinson's disease, a very broad indication. And we're developing LRRK2 with Biogen for both genetic forms of Parkinson's disease linked to LRRK2 as well as the broader indication as well. That study has just begun, and I wouldn't expect results from that until probably the year after next.

Great. Let's move now to the Huntington's program, the Roche-partnered Huntington's program. What sort of readouts could -- can we expect in the near term and then over 2020. And how are you and Roche thinking about potential early filing on open-label data versus natural history data potentially in 2021, if you could frame the readouts. And whether we should assume it will go all the way to Phase III or how you guys are evaluating an earlier opportunity?

Obviously, our Huntington's disease program is incredibly important. And of course, it's important for Ionis but it's so much more important. I mean we have 40 drugs in development, all of which have the potential to be transformative medicines, but it's so much more important for the patients that have this disease. I don't know if anyone has ever met a patient with Huntington's disease, or somebody who's genetically diagnosed and will have Huntington's disease, it's terrible. There's nothing near the stage at which our drug is in development. We're in a pivotal Phase III study that's due to readout in 2022. That is being developed to treat all forms of Huntington's disease regardless of the expansion, regardless of the snips that are associated with the gene and so forth. This drug has to work for those patients, and we're really looking forward to it, the results as the Phase III study reads out. The Phase III study is on track. Incremental new information was reported at the Huntington's disease meeting last week by Roche, CHDI meeting in which they demonstrated that the Huntington reductions that were demonstrated in the 9-month open-label extension update study last year is sustained for 15 months. So we're in the therapeutic range long term for the reductions in mutant huntingtin in cerebrospinal fluid. In addition, they showed that the bimonthly dosing in the open-label extension study is very safe, very well tolerated and is achieving the reductions that we need as is the triannual dosing. So we're looking at relatively infrequent dosing for these patients, and we're seeing good tolerability and good knockdown of mutant huntingtin. That open-label extension, of course, is the extension of the Phase II study that we conducted a couple of years ago while -- and now the Phase III study is in progress. That open-label extension study was due to complete after 15 months of treatment. The database is now locked on that study. The data is being analyzed on looking at clinical end points and safety is -- of course, as well. In addition, our partner Roche initiated a natural history study in the same patient population as the open-label extension study to essentially serve as a control for the open-label treatment group. That study has not completed yet. It's due to complete by the end of the year with database lock. And the analysis of that data, and Roche is planning to present an update on the open-label extension, plus the natural history next year. That, I suppose, has the potential, if the data is really impressive. If it warrants it, it's going to be a data-driven decision. It could support an early filing since the Phase III data wouldn't be due to read out for another year in 2022. However, the most important study is the Phase III study. And anything anyone does with the open-label data cannot compromise that study unless the data is so compelling to warrant the potential early filing. And when there's concrete -- when something concrete happens in that study, with a decision to file early or so on, then I think Roche will announce it at that time.

There's nothing about releasing the open-label extension that could disrupt equipoise in the Phase III, is there?

Well, I mean, certainly, you always have to be concerned about potential bias in a randomized Phase III study. If you're seeing great efficacy that can influence the way clinicians or patients perceive how they're doing in a study or any other aspect of the study. So it really is a fine line you got to walk. When you're revealing data, while the Phase III study is in progress and that's very important. That study, as I mentioned earlier is so precious, that Phase III study is so precious, that drug, it means so much to this community, it needs to be preserved.

Let's move to SPINRAZA. How are you thinking about SPINRAZA's role in the SMA landscape in the context of Zolgensma and future potential launch of risdiplam, say over the next 5 years.

So SPINRAZA continues to be the foundational medicine for all forms of spinal muscular atrophy. It's a miracle drug. More than 10,000 patients worldwide are on SPINRAZA. All -- as I mentioned, all forms of SMA. The early forms, the babies as well as the adults. Biogenics is expecting continued growth for SPINRAZA this year and probably for years to come, we'll see. It has shown incredible efficacy and has set a very high bar for any competition, whether it's gene therapy or small molecules for SMA based on efficacy, safety, tolerability. In addition, we know that the prevalence of SMA is much larger than what was originally projected when we launched SPINRAZA. So the future of SPINRAZA is expected to be bright. We're expecting it to grow and have more and more patients. We've only begun to penetrate -- I mean there's still a long ways to go to penetrate fully the adult population with SMA, which is the largest population for spinal muscular atrophy, so there's a lot of opportunity for growth. In short, we expect SPINRAZA to continue to perform really well, to continue to grow. And it has set a bar for efficacy that is going to be very challenging for the competition to approach.

Will there also be further geographic expansion to drive growth for SPINRAZA?

Absolutely.

What would be the major geographies that you have in mind?

Well, Asia, and Asia is one area and Latin America, in South America where we're expecting continued growth, more approvals. And there's also, obviously, a lot more opportunity for the adult population in the U.S. as well as in Europe.

Got it. Let's move to your -- actually, you know what, let's talk a little bit about your -- some of your partnerships. One, your subsidiary Akcea is in the middle of expanding its pipeline. And one of the things that's been discussed are programs within Ionis that would make most sense for Akcea. Can you talk about how you look at that partnership, and what you think -- what sort of Ionis program best lives in Akcea to optimize the opportunity.

Sure. Akcea was created to be a commercial mechanism for Ionis' rare disease pipeline with a number of assets that were put into Akcea at that time when we created Akcea. As I mentioned earlier, based on the evolution of the company, our ability to commercialize medicines from our -- the Ionis-owned pipeline in different ways is much more attainable today than what it was back when we created Akcea. But we're very excited about Akcea's potential to commercialize rare disease products. Today, Akcea has quite a full agenda. An exciting pipeline of medicines in commercial and in development with TEGSEDI and WAYLIVRA. Launched in the -- in North America and Europe for TEGSEDI, and in Europe for WAYLIVRA. And also a rich pipeline of very exciting follow-on drugs. APOCIII LICA is with Akcea now and is in -- and is about to enter, later this year, a Phase III development for FCS. In addition, we have 2 Phase III studies with our LICA medicine to follow-on TEGSEDI, our TTR LICA drug for cardiomyopathy and polyneuropathy. So there's quite an -- it's an exciting pipeline that they have. It's a full agenda for both commercial as well as in the late-stage pipeline. We have discussed with Akcea the potential for adding another asset into their pipeline later this year. And those discussions are ongoing, and we'll see how they go. But right now, they have a rich agenda.

It's a great segue because I was going to ask you about your thoughts on where the TEGSEDI launch is, and how the LICA TTR can further grow and expand your time line including -- if you could walk us through the neuro TTR transform study. And then also your -- the LICA cardio study that work you guys have.

So Akcea is making steady progress with TEGSEDI commercialization in the United States and in Europe. And PTC, our other partner with Akcea on Latin America is launching TEGSEDI in Latin America, specifically Brazil. And is ahead -- way ahead of any competition there in Brazil. And of course, the disease is endemic to Brazil and in other countries like Portugal and others. And they're making steady progress. And we expect them -- and they have stated that they expect to make continued progress on commercialization of TEGSEDI, while we develop the LICA version of TEGSEDI which is now in Phase III development.

What about a geography like Japan, does that make sense for TEGSEDI? Or is that going to be a LICA?

We're focusing -- our Japan strategy is focused on TTR LICA not for TEGSEDI at this time.

Got it. Got it.

Eventually, TEGSEDI will be cannibalized by the LICA version of TEGSEDI. The LICA version is -- like all of our LICAs, 16 LICAs in development have shown reproducible pristine safety, tolerability, convenience and once-a-month injection dosing, subcutaneous dosing with remarkable efficacy. And the TTR LICA drug is doing the same. And it will cannibalize TEGSEDI in a few years when it reaches the market. That drug is now in 2 Phase III studies. The -- for the -- one is for polyneuropathy, the same indication as TEGSEDI. And the other is for the broad cardiomyopathy indication which was started this year.

So neuro transform is the open-label study, correct? And the control will be the TEGSEDI study -- or the placebo arm.

That's correct. The Phase III study that's now underway for the polyneuropathy version of TTR amyloidosis is really an innovative approach to bring this drug to patients as rapidly as possible. It is one in which it does not have a placebo control group, as you mentioned, Ritu. We will be comparing the efficacy in about 120 patients treated with TTR LICA at 9 months and at 15 months -- I'm sorry, 8 months and at 15 months compared to the placebo group from the TEGSEDI Phase III study. A historical control, if you will. At 35 weeks, we'll be -- 8 months, we'll be assessing the efficacy on the same primary endpoints as we're in the TEGSEDI study. And if it looks good, we can move forward with an early filing or we can complete the study through the 15-month study. As a reminder, we showed high statistical significance for TEGSEDI at both 8 months and 15 months in the Phase III study. So we're pretty confident with a more potent drug. We're going to see even greater efficacy of 8 months and 15 months for the LICA version.

What about the cardio transform study, how are you thinking about that end point, which I believe is 6-minute walk distance. And are you going to control, cap or stratify the number of stabilizer patients you have on that trial?

Yes. So the cardiomyopathy study, of course, is focused on the broad indication of patients with cardiac disease due to TTR amyloidosis. That is the -- includes the large wild-type population. So patients that do not have mutations in TTR as well as the hereditary TTR mutations that have cardiomyopathy. That study is actually not -- the primary endpoint in that study is actually not a functional readout like 6-minute walk test. It's actually a cardiovascular outcome trial.

Got it.

It is a cardiovascular-related mortality and -- or cardiovascular-related hospitalizations in that study.

So that'll generate head-to-head data against the tafamidis Phase III data?

Relatively speaking, so correct. What's different is that we allow in our study patients to take standard of care. So they can take whatever medicines are approved for the treatment of cardiomyopathy -- TTR cardiomyopathy, including tafamidis. So we'll have patients in placebo as well as in the treatment group, and they can take tafamidis or whatever the standard of care is in the geographies that they're in. And we think that, that is appropriate because it's real-world experience with our drug. And also, we believe will help with enrollment time lines because we're not restricting patients from not -- from taking drugs that are out there today to treat their disease.

What are your expectations? What are your expectations for that cardio transform data on survival knowing that tafamidis reduced by like 30% some of the post hoc data and your own Benson data suggests maybe something stronger?

Yes. My -- I have confidence that the drug is going to be successful in cardiomyopathy. Tafamidis is a breakthrough drug for these patients with wild-type cardiomyopathy. There's no other treatment for these patients. And I congratulate Pfizer for developing this drug and seeing it through. But there's a lot of room for improvement. Patients still progressed on tafamidis. It's not that the disease reversed or were completely stabilized. I believe that the silencer mechanism, a mechanism like TTR LICA, will be superior based on its mechanism of action by blocking the production of the disease-causing protein. And as you mentioned, we have data -- a substantial amount of data in patients with wild-type cardiomyopathy and hereditary cardiomyopathy with TEGSEDI in an investigative study with patients with cardiomyopathy where patients have now been treated for more than 5 years. And they're doing better. They're showing better through this mechanism based on the reduction in their heart mass, their left ventricular mass, their interventricular septum thickness is being reduced, they're walking longer distances, their echos are more favorable. And I just met some of these patients the other day. I mean their lives have been normalized. TTR LICA's a better form of that drug so I expect it to be even more efficacious. So yes, we're very, very -- feeling very good about the cardiomyopathy indication.

Great. I think we're out of time. Brett, thank you so much for the time and taking us through next catalysts.

Thanks, Ritu. Thanks, everybody.