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

Great. Hello, everybody. My name is Chad Messer. I'm a senior biotechnology analyst here at Needham & Company. And today, it's my pleasure to be having a discussion with Brett Monia, the CEO of Ionis Pharmaceuticals. Brett, do you want to maybe start us off with a couple of opening remarks?

Sure, Chad. Thanks for the invitation. It's a pleasure to be here today. We're thrilled with where Ionis is today. We're on track to meeting all of our key corporate goals and objectives for the year, and the company has never been in a stronger position financially as well. So we're very excited about the pipeline, the technology and the financial resources that we have in place to see to it that we reach our most important goals going forward. So we're very happy where we are today.

Okay. And maybe we can just start off with something that's on pretty much everyone's mind pretty much every day, and that's the ongoing pandemic. I'm sure you guys have felt that as nearly everyone on the planet has. I know you had a statement out, I don't know, some time ago, a week or 2 ago. Can you just walk us through how you guys have impacted? How you're handling things in these trying times?

Sure. Yes, it is the #1 topic on people's minds, rightly so. I mean these are unusual times as we all know. And in our business, in the business of bringing drugs forward to patients, running clinical trials is particularly challenging because we're dealing with the sites that are actually overloaded with patients on COVID-19 -- with COVID-19 now. And we have to preserve our studies. We have to protect the patients, our employees and the physicians and so on. So it is challenging. But with that said, I feel that we're in pretty good shape. I feel like we got well ahead of this. We actually saw this crisis coming pretty early on, put together a number of task force to carefully look over our commercial pipeline, our clinical trial pipeline, our research organization, our drug supply as well. And we worked very closely with our partners. We think our partners have done a great job. In addition, we're really -- it's early and it's -- in the sense of -- we're assessing the situation, and any trickled down longer-term effects aren't going to be seen so much right now. But right now, we're really not seeing a significant impact on our commercial pipeline, including SPINRAZA. As I mentioned, we're working very closely with Biogen to continue to assess that. Our clinical trials are largely going well, including our Phase III trials largely on track. And our mid-stage pipeline is doing well. And as I mentioned, our drug supply really hasn't been an issue. We have stocks of inventory available at the sites where they need to be. And we haven't had a drug supply issue so far as well. But there will certainly be some impact on clinical trials, the speed at which those trials are conducted as well as the all of the timing and so on. But right now we're feeling pretty good about where we are amidst this crisis.

All right. That's good to hear and I guess, as good as we can all hope for. All right. Now here's the really hard part, that was an obvious first thing to go. The next item is to decide where to go next, and there are so many incredible possibilities and please, as time gets on here, if I'm missing an important topic, it's almost inevitable not to be able to get to everything. But maybe let's start with TEGSEDI, since it's a drug that you've been recently handling the launch of. We're kind of at a point where we're seeing some nice linear quarter-over-quarter growth. Maybe discuss the market dynamics out there. In TTR, there's definitely been some difficulties, but also some interesting tailwinds.

Yes. So Akcea is continuing to do a good job with the commercialization and launch of TEGSEDI in the U.S. and in Europe. And our partner, PTC, is off and running in Latin America and Brazil, in particular. And as you mentioned, Chad, we are seeing quarter-over-quarter growth. It is a highly competitive landscape. It's a very challenging landscape, especially for a rare disease with not just additional commercial products out there, but a range of clinical trials that are in progress, all of which siphon off patients for their various -- to achieve their various goals. What we're seeing is that patients that really appreciate and need the convenience of TEGSEDI as at-home, once-a-week subcutaneous self-administered injection that doesn't require other health care workers there to support administration, they really like it, and they're really enjoying it. These are patients that work regular days, regular work schedules and so on. And that's really where we're seeing the appreciation for TEGSEDI, if you will. It's really the convenience that it offers in that segment of the population. In addition, we're also seeing that the current COVID-19 situation is highlighting that convenience as well. As you know, as we talked about already, it's the hospitals that are seeing patients with COVID-19 are overloaded. They're overburdened. So we are seeing an appreciation by both physicians as well as patients for the convenience that TEGSEDI offers. And we're expecting TEGSEDI to continue to grow in its commercial upside going forward.

Have we seen any patients that we know of that have switched and/or sort of combined? So I guess the combination would be Vyndaqel and switching would be Onpattro.

So we certainly have seen patients take and use both Vyndaqel or tafamidis and TEGSEDI in the commercial setting. And there's good reason to believe that, that sort of combination could produce greater efficacy since the mechanisms are distinct and they would -- we would expect a potential for additive efficacy. In addition, as for switching various drugs for the others, yes, we see some switching. We have had patients go on to TEGSEDI that have progressed on Vyndaqel, and they have gone on to TEGSEDI. And we've done some -- and we've seen some switching back and forth in both directions for TEGSEDI and Onpattro. And -- but it hasn't been a whole lot of that. Typically, patients get very comfortable with the drug that they get on, and they stick with it.

Great. So TEGSEDI is really just the first generation in your TTR franchise. You have one of your LICA drugs coming through development. Can you talk about the importance of that, the additional benefits? And maybe a little bit about the clinical development plan and time lines.

Sure thing. So our TTR LICA Phase III studies, there's 2 of them, right? One for the cardiomyopathy, broad indication, and one for the TEGSEDI indication, polyneuropathy in hereditary population, are in progress. And they are 1 of 5 ongoing Phase III studies today, and we expect to have 6 start later this year. So yes, the LICA platform here at Ionis is a real breakthrough for antisense chemistries, particularly for systemic application, subcutaneous administration. We have now 16 LICA drugs in development and a lot more coming, including this year, that have reproducibly demonstrated all the things that you had wanted to see, all things that we had hoped to see, including efficacy, really high potency, and with a pristine safety and tolerability profile across all these medicines. And we're seeing the same thing for TTR LICA, the follow-on to TEGSEDI. We saw in Phase I trials that we actually achieved greater than 90% reduction as a once-per-month, low-dose, 45-milligram dose injection in normal volunteers. As a reminder, we saw about 75% reductions in TTR with TEGSEDI in the Phase III study. So if TTR -- magnitude of TTR reductions equates to greater efficacy, we should see -- we expect to see greater efficacy in our Phase III studies as well as with the convenience in the tolerability and safety profile that our LICAs offer for those Phase III studies. The Phase III study for polyneuropathy is off and running. And it is, as I mentioned, just really the same indication as TEGSEDI that we're going up for. This is the hereditary TTR population that has polyneuropathy. That study is an open-label study, meaning all patients will get TEGSEDI -- I'm sorry, all patients will get TTR LICA in this study, and it will be conducted and compared to the control group, the placebo group, from the TEGSEDI Phase III study. So a historical control, if you will, it will be compared to. And it will read out using the same endpoints that we did in the TEGSEDI Phase III study, the mNIS+7, the Norfolk Quality of Life, at the same time points that we measured the TEGSEDI Phase III study, 8 months and 15 months. We certainly have the opportunity to file early on the 8-month data if it's warranted, and we're expecting that study to read out in the 2022 time frame or so. The cardiomyopathy study is a much -- oh, I forgot to mention, the polyneuropathy study is about 120 patients. The cardiomyopathy study is much larger. It's a larger population and warrants a larger sample size for a Phase III study. So it's about 750 patients. And it's a study that's similar to the study Pfizer conducted for tafamidis. It's a cardiovascular outcome trial. It's about 750 patients, as I think I said, and patients will be evaluated for cardiovascular hospitalizations and mortality, and over about 120 weeks of treatment. That study is underway. And the other aspect of that study that's, I think, interesting -- and it's obviously placebo-controlled. The other aspect of that study that's interesting, though, is both placebo patients as well as patients on TTR LICA are allowed to take standard of care, wherever that may be in the areas that they are treated. So that can include tafamidis. So we'll be looking at in this study, TTR LICA plus tafamidis versus tafamidis in many -- for a good size of the sample size. And in others where tafamidis isn't available, they won't be on tafamidis, but they could be on whatever standard of care they are. So these are 2 Phase III studies ongoing, and we expect the LICA platform, that's a component of TTR LICA, to perform as all our other LICAs with really great efficacy and with a really attractive safety and tolerability profile.

Great. And before I move on, I do want to remind our listeners and viewers today that they do have the opportunity to submit questions through your dashboard. So there's a ton of different topics anytime you sit down with Ionis. So I don't want to miss out on anyone's favorites. Maybe we can just touch on yet another drug that you have out there that's commercial, that's WAYLIVRA launched in Europe with a complete response letter back some time ago from the FDA. Any updates there? I know it's been your plan to interact with the agency and discuss refiling in the U.S. Any -- where does that stand today?

Yes, there is an update. I'm very pleased to say that we've had very successful discussions remotely, of course, with the FDA on the data package that we've strengthened based on the additional data from commercialization of WAYLIVRA in Europe as well as our open-label extension, compassionate use of WAYLIVRA in FCS patients. And based on the positive interactions we've had with the FDA, we're more -- we're planning to refile this year. We were always planning to refile this year. But based on that feedback, we're feeling very good about that refiling. And it builds on our confidence that WAYLIVRA will become, someday, potentially available for patients in the U.S. as it is in Europe. So we're planning to refile WAYLIVRA this year. And we're working very aggressively to file as soon as possible.

Like TEGSEDI, WAYLIVRA is also a first generation with the LICA coming and plans for that are bigger. So why don't you talk a little bit about APOCIII LICA.

Absolutely. We're very pleased with the Phase II data for APOCIII LICA that we announced in January of this year, in which APOCIII LICA hit all of its primary endpoints and key secondary endpoints in that Phase II study in which we were treating patients with cardiovascular disease with high triglycerides. We got the triglyceride levels down, and we also got some forms of cholesterol down to lower levels. This was a very successful study, also from a safety and tolerability standpoint. Like -- as I mentioned before, our LICAs continue to perform extremely well from a safety and tolerability standpoint, excellent safety. And this has now led us to move into a Phase III program this year for FCS. We're planning to start a Phase III study in FCS in the second half of this year. And it essentially would be a similar study design as the study we did for WAYLIVRA. Maybe it'll be a little bit longer in duration. We haven't put the final touches on it yet. We're working on it. But we are planning to start FCS Phase III this year. And that will be our sixth Phase III study in progress at Ionis with our partners and here with Ionis and Akcea underway this year. In addition, there are a number of other opportunities for APOCIII inhibitors in the health care field. We're also looking at patients with very severe cardiovascular disease that have high elevated triglycerides, but not quite as high as that of the FCS population. These are patients that have the cardiovascular disease due to high triglycerides and other factors. And we're looking at potential Phase III start there this year or early next year. In addition, we're continuing to look at the potential for familial partial lipodystrophy, FPL, as a study coming up as a potential Phase III. And there's also a very broad indication, cardiovascular indication, for a drug that has a profile of APOCIII LICA. And we are considering the possibility of partnering for a very broad indication in the future, which would require a cardiovascular outcome trial, a very large outcome trial. But right now we're laser-focused on getting the FCS Phase III study. So in short, there's a lot of opportunities for APOCIII LICA, and we're aggressively pursuing all of them.

Maybe we can spend that time on what I think an incredibly unique drug in your cardiovascular pipeline and that's Lp(a). So previously thought undruggable target, separate sort of independent risk factor for cardiovascular disease. Maybe you tell us a little bit about Lp(a) and your drug designed to knock it down.

It's a very exciting program, Chad. It's one that I believe flies under the radar a little bit. It's a very large patient population that has cardiovascular disease due to elevated levels of the risk factor Lp(a). These are young people in many cases, people without diabetes, they're nonobese, but they have cardiovascular disease, resulting in strokes and heart attacks due to elevated levels of Lp(a). And it's a risk factor that's not manageable with statins or any other treatments that are out there today. We showed in a Phase II study that in patients with cardiovascular disease due to high Lp(a) levels that, over the course of 6 to 12 months of treatment, we could essentially normalize their Lp(a) levels in all patients virtually in that study. This has led to the licensing of this drug by Novartis. And now they're in Phase III development in the cardiovascular outcome trial. This patient population, again, is very large. It's projected to be 8 million to 10 million people worldwide with Lp(a)-driven cardiovascular disease. So we're talking a big population here. A LICA medicine that's very clean, very safe, well tolerated and very effective. And the Phase III study, as I mentioned, is underway, it will be about 8,000 patients or so, very similar patient population as our Phase II study. Only they'll be treated to [ a combination as ] bigger, and they'll be treated to cardiovascular outcome, heart hospitalizations and mortality. In addition, Novartis initiated, ahead of the start of the Phase III study, an epidemiological study to identify Lp(a) patients to enroll them into the Phase III study as rapidly as possible. And that study has shown -- is paying great dividends. We expect the enrollment for the Phase III study to go very well and on track. The name of the Phase III study is HORIZON study, and it's on its way. We're very excited about it.

All right. I think it's probably worth touching on SPINRAZA, credible drug launch by your partner, Biogen, one of the fastest trajectories to hit the blockbuster. But that's getting to be a bit of, sort of, ongoing changing dynamic landscape. What do you see ahead for SPINRAZA in a world with gene therapy and potentially oral therapy?

Well, in the foreseeable future, we see more of the same, honestly, for SPINRAZA. It is the foundational care for all forms, the spinal muscular atrophy, with more than 10,000 patients today around the globe on SPINRAZA and doing well. So SPINRAZA sets a very high bar on efficacy as well as safety for all forms of SMA. And that's a challenge that any form of competition is going to have to meet because efficacy is so important for a neurodegenerative disease like SMA. Gene therapy is now indicated for SMA patients, 2 years or younger, which is a very small segment of the population, less than 5% is estimated to be. And there's also evidence that has been discussed publicly about patients that are on gene therapy. They start on gene therapy early on in their lives, moving on to SPINRAZA. And we're not surprised because -- that that's the case because we saw it. We read about it in clinical trials for gene therapy as well as the efficacy that SPINRAZA offers, people are going to want it. They're going to want to keep back -- hold back their disease progression. But we'll see. Certainly, it's a new player and will have some impact, but we don't think it will have a major impact. The small molecule splicing modulators that's coming forward, it's hard to tell. It's really hard to compare, Chad. There's not a whole lot of data on the small molecule inhibitor in the real-world setting. It is -- the studies have largely been uncontrolled studies. So it's difficult to assess. And the population that has really been positioned to be most favored -- to favor the small molecule the most is the adult population because of convenience of an oral pill. But yet some of the data that has come out in the older population has been somewhat underwhelming compared to SPINRAZA. And that just speaks to the fact that we have to just wait and see on how great the efficacy will be and how well it'll be tolerated in a broad -- in a large commercial setting, so to be determined. We and Biogen are still very, very excited about the future prospects for SPINRAZA on the commercial front. If I could just take a minute, Chad. I'll just also mention that we're also not sitting still. We started with DEVOTE Phase II/III study, and that's using higher doses of SPINRAZA. We, of course, can do that because of the safety record, the pristine safety record of SPINRAZA, which allows us to go to higher doses. And we're going to more than twice the dose in Phase II/III study. We're expecting greater elevation -- increases in SMN protein, which we expect to translate to greater efficacy. And also somewhat less frequent dosing as well in the loading dose phase for the DEVOTE study. And then in addition, we're getting close to identifying a new SMA drug, a new chemical entity that we're hoping with Biogen to get to annual dosing, once a year dosing intrathecal. And we hope they have identified a drug this year, and they're moving into development next year. So we're in SMA for quite a long time with SPINRAZA in our view as well as with follow-on medicines.

Yes. Now you've preempted one of my next questions because that is definitely a theme at Ionis, and that's not standing still and it's kind of coming out with even better versions of your technology over time and then being able to learn from that and apply it elsewhere. Maybe we can move on to ALS, another really bad rare disease. You guys are going after a couple of heritable forms. Maybe just talk about how much ALS is covered by these. And how are these programs going?

Yes. Another exciting component to our pipeline and another component of the pipeline that I believe is flying under the radar. I don't believe it's fully appreciated how big our ALS program is really going to be. We are targeting 2 genetic forms of ALS today in the clinic. But we also have a third drug now targeting the sporadic form of ALS that's in development and is expected to reach the clinic this year. So -- and we're expecting more drugs for ALS. There are multiple causes of ALS. It's a disease where there's no meaningful treatments out there today. It's rapidly progressing disease. Patients generally die within 3 to 5 years of symptom onset, whether it's genetic or sporadic. And we showed in our Phase II study that we can block the progression of patients with 1 particular mutation, SOD1 mutations, very effectively compared to placebo, and that led to the Phase III study, the VALOR Phase III study, which is underway now due to read out next year with Biogen in patients with SOD1 ALS. In addition -- and I forgot to mention, genetic forms of ALS represent about 20% of the overall ALS population. SOD1 is about 2% of the genetic form, and C9 is about half of the genetic form. C9 is patients with C9 or C9 mutations and that is due to read out next year, too, as a Phase II study. So next year is a big year for ALS, plus we plan to initiate the sporadic drug this year as well in our first-in-man study. So very exciting program in ALS. And as I mentioned, we're expecting more drugs, maybe another couple of drugs to reach development for ALS sporadic and genetic over the next 6 to 12 months or so. One last point, there's also the potential for SOD1 by inhibiting -- targeting SOD1 for sporadic patients as well. There is literature -- scientific literature, and we're doing work with Biogen to examine the potential for targeting SOD1 for sporadic ALS as well as mutant SOD1 ALS. And I suspect -- and our discussions with Biogen are very productive, and we're already thinking about ways we might to develop our SOD1 drug for sporadic ALS once we complete the VALOR Phase III SOD1 ALS Phase III study.

Great. And down to just about 5 minutes. And I do see a question that came in and Wade has joined us. Wade, do you want to handle that one?

You bet. We have a question come in, Brett, from [ Myles ] with WMG. And Myles is asking in the '20 -- in your February 2020 earnings call, you noted that you expect 6 proven concept data readouts in 2020. Is this still the case?

Thanks for your question, Myles. So we are continuing to assess the -- our clinical pipeline amidst the COVID-19 pandemic. And for the most part, all of our trials are progressing forward nicely and most of them are on track. However, we have to assess the situation. It's a fluid situation. We already had 2 positive readouts that I referred to earlier from our mid-stage pipeline, the angiopoietin-like 3 and the APOCIII LICA program, and we're expecting additional readouts this year as well. But I'm feeling pretty good that we will reach our goal of 6 clinical readouts overall for this year from the mid-stage pipeline, which includes our oral program as well as our pulmonary program. But I have to say, we're assessing the situation, and we need to be careful what we lock in at this point because it is -- as you know, it's a fluid situation, but we're feeling pretty good about it.

All right. And then another very exciting topic. You guys begun dosing an oral antisense, haven't disclosed a lot. But maybe talk about what it took to get to that incredible feat. And when can we expect to get some updates on how that's going?

Yes. It is exciting. It's another example of how we continue to push the envelope, innovate, take the technology, broaden the technology's reach for therapeutics. This is a program that was enabled by the coupling of LICA chemistry with our Gen 2.5 chemistry, which is our most potent chemistry. And what we get is additive potency when we combine these 2 drugs, fifty to hundredfold higher potency than what we even see with our Gen 2 molecules. Based on the oral bioavailability we can achieve with -- as a once-a-day pill, we believe that this potency is enough. All the -- essentially, the entire payload is going to the hepatocyte. So it's an hepatocyte-driven oral once-a-day pill strategy. The first -- the Phase I trial is in progress, and it's moving forward. And we're planning to read out -- read that out with our partner, AstraZeneca, later this year. And of course, if it's successful, it opens up oral delivery for all of our LICA medicines, potentially, if we choose to do that. And we're already moving some additional programs forward towards the clinic using oral formulations now, and we're hoping for them to reach the clinic late this year or early next year.

Yes. Very, very exciting. And then maybe just one I often have a discussion with Beth about, but I got you here today, Brett, interested in your opinion, too. You guys have generated cash from operations for 4 years running. How important is it to maintain positive cash flow?

It's important for us to continue our -- we're very proud of the fact that we've been net profitable for 4 years in a row. And despite the fact that we're investing so much in our pipeline and our technology, every aspect you can think of, we're continuing to invest, yet we're still profitable. And of course, that profitability comes from our commercial revenue as well as our R&D or partner revenue from regulatory milestones and the like. And it's a great way to manage tough times when you have R&D revenue as well as commercial revenue in a combination. It is very important to us to continue being profitable, but it's not the most important thing, Chad. The most important thing is to deliver drugs to the commercial setting, to the patients, to continue to advance the technology. And we're going to continue to do that. We have the cash to do that. We're continuing to invest in our technology. We're in-licensing technologies and know-how to continue to advance our pipeline, our programs, and we'll continue to do so. But we think we can invest in building our pipeline, our wholly owned pipeline, the Ionis-owned pipeline, our commercial capabilities to in-license technologies that we think will help us maintain our leadership in RNA therapeutics and still be net profitable going forward. So we're feeling pretty good that we can accomplish all that going forward.

All right. Well, it has been a pleasure having you here today, Brett and Wade. Thank you guys for joining our conference and participating. And be well and stay safe.

Thanks, Chad. It was a pleasure. And you too, be well and be safe. Take care.

Thanks, Chad.