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

Good afternoon. My name is Do Kim. I'm one of the biotech analysts at BMO. For our next fireside chat, we have with us Eric Swayze, SVP of Research at Ionis Pharmaceuticals; and Wade Walke, Head of Investor Relations.

Could you start by providing us a brief update of the commercial products and the typical goals for this year for the late case trials and the proof-of-concept studies you're running?

You bet. I'll kick it off. This is a Wade Walke. It's a very exciting time for us at Ionis. We have a lot of things going on, as we usually do. We have -- but this year's -- it's kind of a special year. We have a new CEO, Brett Monia, who has a vision to build off the tremendous achievements of the last 30 years and take the company really to the next level, with the vision of Ionis as really the leader in biotech and a company that helps to provide really hope to millions of patients with severe diseases. We have the potential, over the next few years, to deliver 10 or more NDA filings for antisense medicines that treat both rare and common diseases and about half or more than half of those programs are Ionis-owned programs as well. We have and are well positioned to achieve our strategic objectives with a strong financial foundation. We have over $2 billion in cash, and we've been profitable for the last few years and are guiding profitability this year as well. And we have 3 commercial medicines. SPINRAZA, which I think everybody knows about, is a blockbuster with over $2 billion in sales last year and continued opportunities for growth. TEGSEDI and WAYLIVRA are both first-in-class medicines treating rare diseases that address the root cause of the diseases that they treat. And we have even more potent follow-on medicines in late-stage development that have the potential to treat even broader patient populations, targeting the same targets as TEGSEDI and WAYLIVRA. TEGSEDI is well positioned in this current environment as a subcu at-home treatment option for patients with polyneuropathy due to TTR amyloidosis. Akcea continues to expand the total number of patients on TEGSEDI and are making good progress outside the U.S. where they recently secured pricing in Spain, Portugal and Italy. We have had very positive interactions with the FDA regarding WAYLIVRA this year, earlier this year. And we plan to refile for approval of WAYLIVRA in the U.S. later this year. Outside the U.S., Akcea is seeing more FCS patients initiated on WAYLIVRA therapy in countries where they had commercial access, which include Germany, Austria and within ATU and France. Beyond the commercial medicine, we have 4 medicines currently in Phase III studies, with the fifth medicine that we expect to start a Phase III study in by the end of the year. First one is tominersen which is the first medicine to address the root cause of Huntington's disease. Enrollment was completed in the Phase III study a couple of months back, and results are expected from this study in 2022. Tofersen, the next one, is the first medicine to address a genetic cause of ALS due to mutations in the SOD1 gene. The Phase III study for this program is expected with data results next year, and so we're very excited about that one. We've already seen some very interesting results in the Phase I/II study with that drug. We've had the first medicine to specifically target and reduce Lp(a), a known factor in cardiovascular disease. And this medicine has the potential to treat millions of patients worldwide. This drug incorporates our LICA technology, I think, which Eric can go into a little bit later on, which makes it one of our most potent drugs. And we also have a follow-on to TEGSEDI that I mentioned earlier, Akcea TTR-LRx. This medicine also uses our LICA technology and is in 2 Phase III studies right now, one in patients with polyneuropathy caused by TTR amyloidosis and one in patients with cardiomyopathy caused by TTR amyloidosis, which is an even larger patient population. And by the end of the year, we plan to start a Phase III study with our LICA follow-on to WAYLIVRA, AKCEA-APOCIII-LRx. Our mid-stage pipeline is also rich and is going to provide us with many catalysts this year. Already -- we've already seen 2 proof-of-concept readouts in the first quarter of this year from Phase II studies with APOCIII LICA and angiopoietin-like 3 LICA. And we're planning to report even more data in the second half of the year. We plan to report data from an orally delivered antisense medicine this year. The target hasn't been disclosed yet, but it's being developed for a cardiovascular disease. And when we talk about that data, we'll disclose the target for that program. We're also planning to report data from an antisense medicine that's being delivered to the lung via aerosol delivery. It targets ENaC for cystic fibrosis. And we plan to report data from 3 Phase II studies with 3 other LICA medicines targeting growth hormone receptor for acromegaly, prekallikrein for HAE and angiotensinogen for resistant hypertension. And this is just scratching the surface of what we have going on at Ionis. You can see why we're very excited about the future and the potential value we plan to deliver to patients and our shareholders.

Great. So just a few things going on over at Ionis.

Just a few things.

Eric, as the Head of Preclinical Research, and given your tenure at Ionis, could you give your perspective on how far we've come in the antisense technology as -- for therapeutics. And what we could expect from the next-generation of ASOs that you're working on?

Yes, sure. So I've been here 26 years as of a couple of months ago, so it's been a long journey. And we've come an awful long way, as I'm sure many people can appreciate. When I joined the company, we were still working with what we call first-generation molecules in the clinic, which were given -- I don't know, maybe it was 3 or 4 grams a week was the effective dose that we thought we were needing to get to, and we were madly working in the labs to try and figure out how to improve the chemistry of the drugs. And we've been chipping away at it ever since. That led to what we call second-generation molecules, which led to products such as TEGSEDI and WAYLIVRA. KYNAMRO was the first approved antisense drug. And they're not perfect medicines, but they're getting us on the dance floor. And they clearly demonstrated -- KYNAMRO was a watershed moment, I think, for Nucleic Acid Therapeutics. It really proved that you could engage targets in human beings and modulate them for a therapeutic benefit. The 2 key advances that have really catalyzed the technology to where it is today are first, the LICA technology. And so that is the GalNAc ligand, which targets the drug specifically to the hepatocyte. This is the first iteration of what I think will be many, many different LICAs for lots of different tissues. I think it's a technology that is broader than just the liver and where we've shown that it's broader than just the liver, and we're aggressively investigating it. Just for the hepatocyte-targeting GalNAc LICA improves potency about 30-fold over molecules like KYNAMRO and TEGSEDI. So you can see that in the TTR LICA data where we have a Phase III program in cardiomyopathy that we'd highlighted and polyneuropathy. And you can just compare the potencies of the 2 molecules, and the LICA does exactly what it's supposed to. This extends dosing interval because we don't -- we can dose the drugs half-lifes instead of having to load dosing with weekly accumulation. We can dose monthly or maybe less frequently now. And also it greatly reduces the dose such that some of the pesky side effects that we were -- dealt with for KYNAMRO, for example, just haven't rid -- haven't been seen at all, as evidenced by Novartis committing to a Phase III outcome trial, and they'll be the latest 7,000 patients. The next key advance was gen 2.5, which uses high affinity chemical modifications than we used in gen 2. This increases binding affinity to target RNA and, therefore, increases potency. And one of the nice things we've seen is that those 2 things are multiplicative or maybe perhaps more synergistic, if you will, in that if you get a fivefold improvement with gen 2.5 and a 30-fold improvement with gen -- with the LICA, you get 100-fold improvement or more with the combination, and that's enabled our oral program, which is a gen 2.5 LICA. And so I think you'll see lots of the gen 2.5s coming in different flavors. We've used that extensively in our cancer pipeline. That's the chemistry behind the ENaC aerosol drug that Wade mentioned. It enables us to get more potency in the lung. And we'll start to use the gen 2.5 more and more for both liver LICA and other LICA programs as we go forward. So I think the key things are in LICAs that we'll have coming forward in the near future and then a little bit farther out, we've got some other chemical modifications that we think will substantially enhance the platform. But we're not really ready to talk about those yet.

Okay. Understood. That's great. If we could move to SPINRAZA. I think that everybody, like you said, knows SPINRAZA as a great blockbuster drug for SMA. But they're also aware of the potential competitive landscape that's coming in Novartis' gene therapy and Roche's oral risdiplam. Could you go over your efforts to improve SPINRAZA's profile and protect your position in the SMA market with next-generation and follow-on molecules?

Yes. So I mean, I can take that. So the first thing is that while SPINRAZA does remain, it is and remains today the standard of care and it has a pretty high bar of efficacy. So it's clearly a heck of a great medicine and it is doing amazing things for patients with SMA, a terrible and fatal disease, right? So it's a high bar, and we think that it's a remarkable and effective drug. Biogen is not sitting still. So one of the things that we'd like to do with SPINRAZA is potentially improve upon its outstanding efficacy by giving higher doses, and that's what the DEVOTE study is doing, is looking to increase the dose of SPINRAZA. And the other neat thing that you can get from that is extend the dosing interval. So it is an intrathecal injection. Obviously, the less frequent we can give those injections to patients, the more convenient it is to take the medicine. And one of the things about SPINRAZA is it's -- we've known has a very long half-life. So in preclinical experiments, the effects persisted for a year in rodent studies, that's been -- that's published data. So we think that increasing the dose will allow us to also decrease the dose frequency. So there might be 2 things we can achieve with that. One would be increased efficacy, and the second is reduced dosing frequency, both of which would be good for the profile of SPINRAZA. The other thing that we're doing with Biogen is looking at potential follow-on molecules. And there, we're looking to do the same 2 things. One is to spread out the dosing frequency. And there, we've identified some molecules in preclinical work that we think should get us to a yearly dosing interval. Maybe a little longer, but yearly is the target. And we're doing that by improving potency and just optimizing the molecule and making it to support that type of long-term dosing profile with doses which should perhaps, again, increase the efficacy maybe to the same levels in the DEVOTE study. So that's the idea with the follow-on.

Right. Okay. Well, what are you seeing in the current market? Right now, Novartis' gene therapy is approved in the U.S. How well is that being received? And are you still seeing uptake for SPINRAZA in the U.S. for new patients?

I'll kick that back to Wade.

Thanks, Eric. SMA is a very severe disease. Before SPINRAZA, the most severe patients usually die from their disease before the age of 2. And now these -- if these patients are treated early before symptom onset, we've seen that most can expect to live normal or close to normal lives. While SPINRAZA has demonstrated significant benefit in later onset patients as well, with data recently reported in patients treated for over 4 years demonstrating significant improvements in these patients. But even though SPINRAZA has had the most successful rare disease launch in history, there is still tremendous opportunity for growth. There are about 11,000 patients on SPINRAZA now. But Biogen estimates that there are over 45,000 patients around the world with SMA in specifically markets they have access to. So there's still quite a tremendous opportunity for growth. And I think people underestimate the desire in these very severe diseases for multiple therapeutic options. So even though there are competitors -- now are coming, none have really proven the long-term safety and efficacy profile that we've seen with SPINRAZA in patients of all forms of the disease, in infant onset, later onset SMA patients. And we think in a disease as severe as SMA, SPINRAZA still has a significant growth opportunity. And I probably -- outside of the United States, has shown that there's still a lot of head markets, a lot of patients to access. So we think there's still a pretty good growth opportunity for SPINRAZA. So I'll leave it there and turn it back over to Eric.

Maybe you could -- unless, Eric, you have some additional comments on SPINRAZA, I was going to move to tominersen, the Huntington's drug. I was hoping you can give us the latest on the progress of the Phase III study and what the plan is for the Phase II extension study? And how you feel about the profile of the drug so far in terms of the ability to reduce HTT and also the safety events that have been coming out from the clinical data.

So as Wade mentioned, the Phase III generation HD study run by Roche is fully enrolled as of a few months ago. That's a 2-year experiment. So we're expecting data on that Phase III, the pivotal trial in 2022. That trial has 2 doses of tominersen of 2 frequent -- 2 dose schedules, the same dose, 120 milligrams given every 2 months or every 4 months. And importantly, what we've learned from preclinical data is we have a nice model of what the target reduction that we've observed in CSF for mutant Huntington will correlate to in preclinical species, such as primate, built that model up and have used that to inform us and predict what levels of target reduction we'll get with the every 4-month and every 2-months dosing and are confident that the every 4-month dosing should give us the target suppression that we got in our preclinical species where we show the reversal of Huntington's disease. So that trial is off and running. I feel really good about that trial, like our dosing regimens, and I really like that we put in the every 4-months dosing regimen for a convenience for the patients because I really think it's got a great shot to work in the disease. For the Phase I/II open-label extension study you mentioned, that study, there was biomarker and safety and pharmacokinetic data presented at the CHDI meeting earlier this year. Roche is running a natural history study in parallel, that will complete earlier -- later in 2020. And that will give Roche something to compare the natural history data of open-label extension 2. So we'll have the natural history study and the open-label extension and I'll have something to compare the clinical outcomes data to. So Roche will take a look at that later this year and then present the data at some medical meeting in 2021.

And from what you've seen from the Phase I/II extension study, do you think that there's areas where you'd be able to improve on the HTT molecule if -- with the investments in technology that you're currently working on?

Well, so I mean tominersen is a very good-looking drug, right? So it's reducing its target. Roche did a nice job in the Phase I/II, working with us to test the top end of the dose response curve. So we're very confident that we've engaged Huntington all we need to and probably more at the top end with the monthly dose. So I think the drug has the efficacy it needs. We've been -- it was -- it is true, it's one of the first drugs that we moved forward in neurology. It was actually a program that was started before the SPINRAZA program internally, not the clinical program, but the research program in collaboration with CHDI and Don Cleveland's Lab. We've made a lot of slow, steady improvements in how to make drugs for the central nervous system and how to optimize them over the years. So yes, I think -- and I think that it would be possible to make a newer -- a slightly perhaps more durable, perhaps more potent version of tominersen. Probably what I want to say about that at this juncture. But I think tominersen is a great-looking molecule. It -- the safety profile has been excellent overall with the molecule. And so given intrathecal dosing every month, I think the tolerability profile has been good. Tolerability profile remains good, and the drug is doing what it is supposed to be doing, which is lower mutant Huntington. So I think it provides a great test of the hypothesis that lower mutant Huntington in the Huntington patient will make a disease benefit. So we're excited to see the data.

We are too.

As are many.

Maybe if we move to the LICA technology, and we've had multiple readouts, Phase II proof of concept. When you look at the data across the studies, how do you see the LICA safety profile playing out versus the safety for the -- for each target in the clinical trial? What do you think that the underlying LICA safety offers to your platform of drug?

Well, I think it's a huge advance. And we touched on it earlier. It's just getting the dose down, right? So it allows us to dose less drug less frequently. And that does multiple things. It obviously adds a lot to patient convenience and potential uptake in some competitive marketplaces. If you can give a low volume painless subcutaneous injection once a month or perhaps less frequently, it's a huge advance over a much higher volume weekly administration. And I think it's nicely competitive and potentially superior to some of the antibody therapeutics, which are higher volume injectables every 2 to 3 weeks for a lot of these antibody drugs. And I think we can get in a pen device with a monthly type formulation or a low volume injectable. And beyond that, it takes some of the issues we had with our higher dose weekly programs and has eliminated. We just don't see any of those side effect issues that we've seen. And again, it's just getting the dose down. And a lot of these were Cmax dependent effects where you would tickle the toll-like receptor or something and have some inflammatory effect in the lower dose, it just doesn't happen. So I think the safety profile of the LICA has been pristine to date, and we're very happy with that. And I think it allows the technology to be used in many, much larger market indications where there's lots and lots of patients and you need that type of safety profile.

Right. Okay. Earlier, you mentioned about oral formulations for ASO and combining technologies to get the potency high enough for those who work. Is that -- was that the only challenge of getting to an oral version? And how do you get to the point where we'll have oral data -- data for on oral therapy this year?

Well, yes, I think the key challenge was potency. So when we started looking at oral early on, we were gratified to find that antisense drugs didn't get taken up orally, if not very efficiently. And we worked with -- I mean, so worked with some formulations to optimize delivery to the gut and put it in a capsule or a tablet formulation. And really, we have optimized that with the new generation of molecules, right? But there's nothing magical in there. I think the key is just getting the potency up so that you can live with 10% and have a tablet or a capsule that's a normal-looking pill and not a big handful of large caps, all right? So that was really the key. And we'll see where we are when we take a look at our data.

Great. All right. So we have about 2 minutes left. Maybe with the final time, could you talk about the other tissue-targeting technologies you're working on and where it's heading longer term?

Yes. So well, we published our GLP-1 targeting approach for targeting the beta cell of the pancreas. That one gave spectacular improvements in potency, whereas we didn't have any target engagement in the beta cell before when we put the GLP-1 on the oligo, it was amazing potency, better than even the GalNAc LICA. So we're working hard to try and translate that and move that forward. And beyond that, we have a very broad and very aggressive LICA program targeting all the tissues that one would be interested in, in targeting with antisense molecules. People are making -- people -- I'm sure people have seen some of the transferrin receptor targeting data of -- from other companies. We've been well aware of that and are excited about the ability to target muscle with variety of ligands, including potentially transferrin receptor acceptors and also other ones. We're looking at LICAs for lots of different tissues, and I think that, that's one of the futures of antisense technology is getting LICA technology to work for the tissue you want to target. It will lower the dose and improve the convenience and make the technology do exactly what it should be, which is a precision medicine tool for modulating gene expression in one tissue where you want to and not where you don't. So I think it's going to be hugely important, and we're investing big time in it.

Well, that sounds great. That's all the time we have. Thank you, Wade, and thank you, Eric, for joining us and providing all the details and overview of the company. Appreciate it.

Thank you.

We'll take a brief break and return for our next presentation in a few minutes. Thank you.