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

Thank you very much for attending the Morgan Stanley 18th Annual Global Healthcare Conference. I'm one of the biotech analysts here. My name is David Lebowitz. Before I get going, let me begin with the requisite disclosures. Please note that this webcast is for Morgan Stanley clients and appropriate Morgan Stanley employees only. This webcast is not for members of the press. If you are a member of the press, please disconnect and reach out separately. For important disclosures, please see the Morgan Stanley research disclosure website at www.morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative. And with that, I'm happy to have with me in this session from Ionis Pharmaceuticals, CEO, Brett Monia; and CFO, Beth Hougen. Ionis is a leader of RNA medicine, certainly, focusing on antisense. I guess, Brett, if you could give me a top-level discussion of Ionis. Certainly, the company's undergone some transition in the last year with a change at the top. And tell me about your strategic direction.

Sure, David, happy to. And thanks for the invitation to participate in today's Healthcare Conference. Very exciting time for me to be taking the helm at Ionis. I'm a 30-year-plus vet at Ionis. Research scientist and drug developer at heart. Over the last few years, I moved into the Chief Operating Officer role as a stepping stone towards a CEO position. And I couldn't be more excited about the opportunity today. Ionis is in an incredibly strong position today for growth, having accomplished so much already and on the verge of accomplishing so much more. We pioneered the field of RNA-targeted therapeutics, something we're very proud of. And what that essentially did was create a new sector in the pharma business called RNA therapeutics, which now -- which we believe Ionis continues to lead, but still -- but now there are many other players that have come on into the field, all of whom are providing real -- having a real impact on the lives of patients and bringing new drugs forward to the market. So we're very excited about that. And also, as I mentioned, very excited about the future. Our pipeline of 40-plus drugs in development today are all performing very well. We're on target to achieve 10 or more new drug applications for potential marketing approvals through 2025, potentially starting next -- as early as next year. That's on top of 3 recent approvals with SPINRAZA and TEGSEDI, WAYLIVRA, just over the last few years. And the technology continues to advance, allowing us to build out our pipeline even more, tackling diseases that were previously untackleable, unapproachable. So times are very exciting at Ionis, building off the past and the future couldn't be brighter.

Excellent.

Just recently, the company announced a shift kind of in strategic direction, with respect to Akcea. Akcea was reformed a few years ago, really focusing initially on cardiovascular products and cardio lipid products, and you decided to bring the subsidiary back in-house. I guess what was -- what went into the process of making that decision? And I guess what are your thoughts on the potential of these types of arrangements going forward?

Yes, very exciting development. Very exciting decision to reacquire Akcea. We're very pleased about how the process has gone so far and looking forward to the future. This is the right time for us to reacquire Akcea company. We created, as you mentioned, David, a few years ago, 5 years ago or so, to build out commercial capabilities, to commercialize some of the assets in our rare disease pipeline. And it was done at a time when we were still working on proving the platform, the antisense platform. We weren't there yet. SPINRAZA hadn't been approved yet. Our LICA platform wasn't there yet. We're still working on that. Our neurodegenerative disease pipeline, a pipeline that I think is among the very best in the industry, wasn't even validated yet. And we have a lot of work to do, to focus on R&D, to advance the technology. And we created Akcea to allow us to focus on that, on developing the platform, while they build commercialization expertise. And they did that, and they accomplished a lot. And now we're there. We've proven the platform. SPINRAZA's a blockbuster. The neuro pipeline is among the best in the industry, as is our cardiovascular pipeline and the technology is proven in many, many different ways and growing. So now it's time to look forward to the next phase of growth for Ionis, which is to build out our commercial capabilities. And as a step in that direction, we brought back in Akcea to help us accomplish this faster. And this also, of course, brings in not only those capabilities, but also offers many opportunities to improve efficiencies as well. So we're very excited about the acquisition. We think it's part of the evolution, if you will, of Ionis.

Does that suggest that in the past, Ionis has been very aggressive about getting partnerships across this platform? And if you're going to have more of a commercial enterprise, does this mean that you might step back to some extent? I mean still continue the partnerships when optimal, but not be quite as aggressive or pursue them quite in the same way?

I think that's exactly right, David. We have one of the most -- one of the largest and one of the most exciting pipelines in the industry, and it will grow. They'll continue to grow with 4 to 5 new drugs entering the pipeline each year. And based on our financial strength, based on the successes we've had with the technology, we're in a very different position than we were years ago, where we can pick and choose which drugs make the most sense to provide the greatest commercial value, the greatest value to our shareholders and to patients. When it makes sense to partner, and to hang on to those drugs, which we think brings the greatest value to Ionis that we want to keep through Phase III and to bring to commercialization ourselves. So we're really in an enviable, I think enviable, position of being able to pick and choose amongst a really exciting pipeline, to partner strategically when it makes sense with the right partner under the right terms, while keeping those drugs that make sense for Ionis to hold on to, through approval and through commercialization. So we have that kind of flexibility, and I think it puts us in a very good position.

Okay. Let's go on to SPINRAZA. $72 million in royalties in the most recent quarter. Clearly, the growth has been continuing to be strong. I guess when you look at this point in launch, where is the growth primarily coming from? Is it -- whether that's the age of the patients that are coming in generally getting older, younger? Is it more U.S., more international?

Sure. I'll make a couple of comments, and I'd like to toss it over to Beth to provide her thoughts on where we see SPINRAZA's growth coming from in the future. So SPINRAZA continues to perform as a blockbuster medicine as it deserves to perform like. It is the foundation of care, for all forms of spinal muscular atrophy, and has demonstrated now with, in over 11,000 patients today, a pristine safety record with remarkable efficacy. And we are looking at Biogen to continue to perform very well in the commercialization of SPINRAZA as it has done in the past, and for that and for SPINRAZA to continue to grow. Beth, would you like to get into some of the details and talk a little bit about where we see the growth coming from?

Yes, of course. So I think Brett said it extremely well. SPINRAZA is the foundation of care for these SMA patients. We've got 8-plus years of clinical and real-world data in all types of patients, all ages across the world. And in every instance, SPINRAZA continues to demonstrate its exceptional efficacy and pristine safety. So on that backdrop, the growth, I think, is going to continue in United States with the adult patients and the older patients. That's the largest segment in the United States. About 60% of the prevalent population is in the adolescents and adults. And we'll continue to see growth there. Outside the United States, of course, that's where your biggest market opportunity is, and therefore, you could anticipate most of your growth is going to come from outside the United States, just simply because of the significant population outside the U.S. And in that case, I think you're going to continue to see growth, not only with the adults, but also -- really across all the patient ages and types, much as what we've been seeing already. When we launched or when Biogen launched SPINRAZA in the end of 2016, we were estimating about 20,000 to 25,000 patients worldwide. A couple of years ago, Biogen increased that estimate to about 45,000 patients. And just recently, they upped that again to 60,000 patients worldwide. And those 60,000 patients are across markets worldwide, where Biogen has a commercial presence already. So you can see substantial growth across the world in all of these markets in which Biogen already has the commercial presence and therefore, can build off of that presence to grow SPINRAZA revenues and patient numbers. And we continue to see substantial growth in numbers of patients and expect that, that will continue to translate into revenue growth. And therefore, growth to Ionis in terms of royalty revenues.

So the market is changing as far as competitors. Clearly, there's a gene therapy that's entered the market, but also there's going to be -- there's an oral therapy that's entering the market. Could you speak to how the emergence of these therapies could affect SPINRAZA?

So really building off of what Beth and I already said, as a starting point, SPINRAZA has set the bar very high for all competition. I mean it was the first drug ever approved for SMA, and it's approved for all forms of SMA, including presymptomatic to the adult population. The efficacy is stunningly beneficial to patients. And the safety record in the real-world setting, as Beth mentioned, we're in 11,000 patients today on the drug, well over, has been remarkable. It has been pristine. So a very high bar for competition to achieve, yet there is now competition emerging. Gene therapy for the infant population, 2 years and younger in the United States, which represents a very small segment of the population, about 5% or so. So not a big impact, but it will have some impact in that segment. And then the oral drug, risdiplam, as you mentioned, recently approved and will now begin to launch. But I really think that the dust is going to have to settle, it's going to take time, for this to see -- to settle, to see where -- how this whole market plays out. As mentioned already, we and Biogen believe that SPINRAZA will continue to perform like a blockbuster for years to come, and will grow in patients. It's got a big, big lead over the competition, and the bar has been set very high. In addition, our partners at Biogen and with Ionis has not -- are not sitting still. There are a number of post-marketing studies that are in progress to even further enhance the profile of SPINRAZA, the attractiveness to patients and physicians and families, the DEVOTE study is in -- the post-marketing study is in progress. Look, examining higher doses of SPINRAZA to demonstrate even greater efficacy and possibly even lower -- less frequent intrathecal administration. And of course, we can do that because of the safety that SPINRAZA has demonstrated, we can go to higher doses. And then the response study, which Biogen announced, and will start probably early next year, which is to treat patients who are suboptimally treated, with respect to benefit, that go on gene therapy, who then will then go on to SPINRAZA. A situation and an experience that is happening in the real-world setting already. Patients on gene therapy oftentimes go on to SPINRAZA to get added benefit. And Biogen just wants to actually demonstrate that in an actual clinical trial. And then through the advancements we're making at Ionis in medicinal chemistry of oligonucleotides across the board, but in the CNS is one area, too. We're working with Biogen to identify new chemistries, new follow-ons to SPINRAZA that allow us to get to potentially once-a-year annual dosing intrathecal. And once you get to annual dosing, I mean, really, the advantages of an oral once-a-day pill -- or formulation, actually, it's not a pill. It's a liquid formulation. I mean diminishes a great deal. So we think that the future, despite the competition, which is great for patients to have choices, will still be very attractive for SPINRAZA and our follow-on company.

So if we move on to TEGSEDI. How has the pandemic impacted TEGSEDI, given that it's a subcutaneous therapy and it's chief competition in ONPATTRO is intravenous?

Yes, Beth, you want to go with that?

Sure. I'll jump in on that one. As you point out, one of the significant benefits of TEGSEDI over the competition is the fact that it is an at-home subcu injection. And in this particular environment, being able to take your medicine at home without having to go into an infusion clinic is very attractive to patients. And so that benefit has been magnified in our current COVID-19 environment. And we see that patients are staying on their medication, and they're taking advantage of that benefit. It's easy. We ship the drugs to their home. So they basically have a month's worth of supply show up on their doorstep, and they can just take their medicine once a week where -- when and where it's convenient for them. And we've seen that, really, across all of the jurisdictions in which TEGSEDI is available. And in fact, have actually been able to increase the reach of TEGSEDI in Europe with new pricing and reimbursement approvals across a number of countries in Europe and particularly, and most notably, in Southern Europe, where there's a very large endemic patient population, particularly in Portugal. So we think that the profile of TEGSEDI as the at-home subcu injection has very significant benefits. And we hope to see continued momentum over the course of this year and into next year with TEGSEDI.