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

Good afternoon and good evening, everybody. Thanks for joining us for our final company presenter at the BofA Global Healthcare Conference. My name is Jason Gerberry, smid-cap biotech analyst at BofA. And I'm pleased to be introducing Ionis and Brett Monia, CEO of Ionis. And Ionis, for those of you on the line who don't know, is a leader in antisense oligonucleotide therapeutics, or ASOs as we may refer to them on the call. So first off, Brett, thanks for joining us.

Thank you, Jason. It's a pleasure to be here.

Yes. So hopefully next year, we'll actually be in London, but maybe we can just start big picture. And I think it's timely, given you'll have updates in the fourth quarter around new dosage form, or say new routes of delivery, for ASOs potentially between inhaled between oral ASOs in the second half. So I guess maybe can you help frame for us how important the data updates that we'll get around these routes of delivery will be? How derisking do you view the data updates that we'll get if the data pan out as you hope that they will? Just trying to get a sense of how we start to think about how this opens up the opportunity set for Ionis as a drug developer.

Sure. Happy to. Jason, we've been at this in opening up new opportunities for target new organ systems and new cell types with oligonucleotide therapeutics for decades, for a long time. And we were the first to work in the liver, and in certain other organ systems, first to apply our drugs intravitreally for eye diseases, the first to validate intrathecal delivery for central nervous system, neurodegenerative diseases. And we think we're getting close to doing this for pulmonary diseases by delivering our drugs by aerosolization as a once a week delivery to the lung for pulmonary diseases. And also, we think we're getting close to commercially viable oral delivery as well. And as we said, we're planning -- we've been working on this very hard with -- through medicinal chemistry, principally and really optimizing the chemistry for both routes. And we are planning, as you said, to provide an update from our pipeline on clinical studies involving both routes of delivery later this year. The pulmonary program is -- involves our ENaC program, so a channel on the epithelium in the lung. And this drug is now in Phase II studies in patients with cystic fibrosis, and that study will read out next year. However, we're planning to provide an update from our ENaC program from our Phase I data as well as an update on the development program later this year, in which we're going to be sharing data providing the justification, the rationale for the approach, the preclinical data, the clinical data showing target engagement, safety and tolerability. And we think upon achieving robust target engagement with good safety and tolerability, it really opens up a big opportunity for pulmonary diseases like IPF, COPD, cystic fibrosis, other types of lung diseases. So -- and the only other thing I'll say there is that we have 2 other drugs in development right behind an ENaC for pulmonary diseases. So we think that this is going to be another dimension to drug discovery for antisense drug for pulmonary diseases. We're also planning, as I mentioned, an update on the oral program later this year. We've been working on oral for quite some time using both formulation strategies as well as chemistry strategies for our drugs. And with our partner, Astra -- AstraZeneca, we've done a lot of preclinical work in animal models, dogs, rodents, monkeys, really demonstrating the proof of concept in those models that gives us the belief that we've tackled a commercially-viable oral delivery as a once a day pill. We're now in the clinic to prove that, and we're going to share that data later this year. We're going to share the preclinical data. And we're also going to provide the justification, the rationale and an update on the clinical studies that we believe will support commercially viable oral delivery. And your question about how significant would this be? Quite significant. It could really open up oral delivery for a large segment of our population -- I'm sorry, of our pipeline. That gives us a significant competitive advantage over other modalities. So it could be a real big deal. And we're looking forward to sharing those results later this year.

Thinking about ENaC and the inhaled opportunity, obviously with ASOs, an important challenge historically has been preventing degradation of the ASO so that it can get to its target site. So how broadly transferable would the findings be if you can drug ENaC as a target to some of these other respiratory conditions that you alluded to? Just trying to get a sense of what one can infer and extrapolate from a positive finding there.

Yes. That's one of the big advantages of a platform technology, right, is when you're within a chemical segment of your platform, which we would be here in pulmonary diseases, it would be directly applicable to many other drug targets for many other disease indications. So what we learned from the ENaC program would be -- would really, really propel us into -- and give us the confidence that other drugs are going to work for diseases like idiopathic pulmonary fibrosis, where we have a drug coming to our genetic cause of IPF and COPD as well. So -- and the same is true for oral because the chemistry is the same from drug to drug and the formulations that we'll use are the same is directly applicable, just like it was in the CNS when we validated SPINRAZA and intrathecal delivery for CNS diseases, and we showed we can get broad distribution in the brain, in the cord, and we can show knockdown in or up-regulation in the case of SMN. It was directly applicable to Huntington's, and ALS, and Parkinson's, and Alzheimer's and so on. So it's a huge advantage of being a platform technology. When you validate a new route of delivery, you then open up a large opportunity for drug discovery.

Got it. Great. A lot those lines, thinking about your more established, I guess, chemically modified ASOs or LICAs, as we think about the ongoing safety debate between RNAi versus ASOs, where do you feel like you are in terms of validating the LICA platform? I think in the past, you've talked about largely the consistency, consistency of target knockdown and safety seen across LICA as the thing that gets you most encouraged. But wondering if you can just chime in on that topic and debate on where you think you're at?

I think, there really -- there's never a real need for a debate on the safety of our LICA technology anymore. We really have so much data validating this strategy, both from an efficacy, and safety, and tolerability and patient convenience standpoint, with thousands of patients now treated with LICAs across 15 or 16 different LICA drugs in clinical testing, validated, not only by -- well, Ionis says, but validated by our partners like Novartis and Bayer and AstraZeneca and Pfizer, who have really doubled down on Ionis' LICA platform. And they are now in the midst of Phase III and large Phase III studies and large Phase IIb studies with this platform. Really demonstrated the confidence they have, not just us, in the performance of these drugs and the safety and the convenience and tolerability of these drugs. As I mentioned, we have now more than well over 1,000 patients with patients treated over a year with our LICA drug showing exquisite pristine safety tolerability with reproducible potency as once per month subcu injection. Or even less frequent, we can go to less frequent injection if we felt that there was a competitive reason to do so. And our LICA platform today is principally focused -- is entirely focused in the clinic on liver LICA. So as I said, we have 15 clinical studies from Phase I through Phase III, using liver LICA drugs, our own drugs as well as -- that we're developing as well as our partners. But liver LICA is just the beginning, Jason. We have now -- we're developing LICA chemistries for a whole range of new organs and cell types that precisely deliver our drugs to the cell type that we want to deliver the drug to. The hepatocyte for liver LICA, we're now on the verge of succeeding in muscle for muscle diseases, for example, like myotonic dystrophy or Duchenne's or heart muscle for heart failure, directly targeting the heart cardiac myocytes. We're also making great progress in immune cells for immune disorders or even in cancer for immuno-oncology. And we're also developing strategies for the lung epithelium to make the drugs that we're delivering there even more potent. So lot of experience with liver LICA. The experience really, I think, validates this strategy. And we're expanding it now to other organ systems. And we're hoping to provide an update on some of these other LICAs later this year as well.

Great. Great. And so before we jump into some programming-specific questions, just the -- I wanted to quickly touch upon the recent Akcea update in transaction. And so maybe if you can talk a little bit about how you're envisioning any changes to the commercial strategy behind TEGSEDI and WAYLIVRA once the products are, I guess, under your control as a marketer? Or given the prior arrangement if you had a lot of input into those decisions, perhaps there's just not a lot of change, practically speaking. Can you maybe just speak to that dynamic?

Yes. We're very -- I am personally, and the leadership team at Ionis, is very excited about the reacquisition of our commercial affiliate Akcea. Ionis is well recognized -- has been well recognized for decades as a leader in R&D innovation, and we're proud of that. And scientific innovation will always be at our core. It makes us what we are. And we've proven that with the pipeline we've created and the drugs we've brought to the market. The acquisition of Akcea and the building of our commercial capabilities really represents the next step in our evolution. It's the right time now with us having proven the platform, having proven the technology and on the verge of delivering a vast increase in the number of products to the market over the next few years. We're projecting 10 or more new drug applications through 2025, starting potentially next year with our ALS drug. With that now proven, it's now time to expand our vision, expand our scope to our own pipeline, in addition to partnering when it makes strategic sense to build our pipeline, and to bring products through the finish line, through Phase III and to bring products through commercialization ourselves. The acquisition of Akcea and all the great things that they've accomplished over the years, particularly the commercial capabilities that they've built, the partnerships that they created and so on, it's a great addition to Ionis. And it is the next step, and it is a key step in us building our commercial capabilities going forward. So we're very excited about it. And it's not a shift. It's really a step in our evolution, I would say.

Got it. Great. Maybe shifting gears to SPINRAZA just because it's obviously topical, probably will be topical for the next few quarters, just given the PTC Roche launch of risdiplam. I guess the COVID-19 backdrop, there was at least anecdotal feedback around maybe physicians using less medication because of emerging evidence that you could perhaps administer less frequent critical therapy. Any color or commentary you can provide how the pandemic backdrop is impacting SPINRAZA utilization maybe first?

Sure. SMA is a severe disease. And depending on the type, type 1 is a lethal disease. Type 2 is a lethal disease. Type 3 patients have very serious symptoms, but they have normal longevity, lifetime longevity. My point is that there's a need for drugs to treat SMA and patients. And physicians find a way to get them to get access to drugs even in a pandemic. With that said, there has been some impact on the commercial revenue for SPINRAZA that was encountered in the second quarter. Biogen reported a slight dip in revenue in the second quarter compared to the first quarter. Prior to that, we were achieving quarter-over-quarter growth for SPINRAZA each quarter. That was due to the peak of the pandemic, and there was some impact and some misdoses and those sorts of things. But that is largely behind us now, and Biogen, our commercial partner is expecting continued growth for SPINRAZA now that the pandemic is -- not behind us, but is manageable. And the other thing about SMA that Biogen has done a great job doing is identifying more patients. The prevalence of SMA appears to be much larger than what we originally planned -- expected. Now it's north of 60,000 patients with SMA. When we first started our Phase III studies with SPINRAZA, it was estimated to be about 30,000, 35,000 patients. And these are patients all in countries, geographies, where SPINRAZA is available today. So we think there's still plenty of real solid upside for SPINRAZA growth going forward.

Yes. It seems like the international opportunity is important for growth and where you still have the lead in terms of market versus newer competitive alternatives. What I wonder maybe more medium-term to longer term, how quickly could you be in a position to be rolling out potentially intrathecal versions of SPINRAZA, where you only have to give it every 6 months or perhaps even a year?

Yes. We -- as we're doing with oral and pulmonary as with in LICA that we talked about earlier, where we continue to work and further optimize our medicinal chemistry for CNS applications. We're doing that here at Ionis. We're doing that with our partner Biogen and we're doing it with Roche. And we're making a lot of good progress. We think that we're getting very close to biannual or annual intrathecal dosing through, basically, stabilization of the molecule to increasing the half-life in the CNS. And I think we're going to be in a position to -- with Biogen, to put a follow-on for SPINRAZA into development next year. And our target is, at a minimum, twice a year dosing, but our real goal is annual dosing. And it's looking good. We're still -- we're in the late stages of research, and I think we're getting close to picking a candidate.

Got it. Great. And just lastly on this, before we jump to more of the pipeline. But Roche, I think, had some comments that 25% of patients with type 1 and 2/3 of risdiplam patients, previously, I guess, were treated with SPINRAZA. I'm wondering, I suspect these aren't switches, that perhaps these are just patients who maybe have dropped off therapy due to tolerability reasons. But can you address that dynamic? Do you have the sense that, at least in markets where risdiplam is available, is there meaningful switching? Or is there a meaningful number of patients out there who, for whatever reason, spinal scoliosis, couldn't get SPINRAZA and are now candidates for risdiplam?

Yes, Jason, it's really too early to make those calls. It's really to our early to tell. We're just beginning to gather data on impact of risdiplam on SPINRAZA's commercial growth. Biogen is doing a lot of that work, and we're working -- and they're communicating that to us. It's really too early to tell. SPINRAZA, as I said, I think, before, is the standard of care, foundation of medicine for all forms of SMA for more than 50 countries reimbursed around the globe. Prevalence is higher than what we originally were projecting. And it's going to continue to grow. Risdiplam is going to be a significant competitor. We're not disputing that. But risdiplam also has a very high bar to meet with, that SPINRAZA has created, a high bar on efficacy and safety in the long term. With more than 11,000 patients of SPINRAZA around the globe today, there's a lot of catching up to do. As for statements anyone has said on the competitive side on who is switching or what patients are going on to risdiplam or not, I really can't comment on that. I don't have data that I'd be confident to comment on that right now.

Okay. Maybe shifting gears to Huntington's and HTT ASO, very interesting program and obviously a very large underserved market. I think in the past, one of the debates and topics around HTT ASO is whether or not it truly crossed the blood-brain barrier, like it does in animals. And I think in the past, you guys have talked about drawing comparisons to SPINRAZA, autopsied humans to make the point, I think, that the drug can get into the brain. Can you elaborate on that point? Do you think any of the chemical modifications between SPINRAZA and HTT ASO are just not significant enough to matter when it comes to that drug delivery debate point, if you will?

So remember that we have -- we're delivering our drugs for neurodegenerative diseases intrathecally. So these aren't systemically applied. They don't need to cross the blood-brain barrier. They don't cross the blood-brain barrier. That's why we delivered them intrathecally. We have proven this platform for neurological, neurodegenerative diseases for CNS in the spinal cord and the deep structures of the brain in the surface structures of the brain. In so many ways in the clinic with SPINRAZA, with SOD1-ALS, with our knockdown of Huntington and so many other programs that you'll be hearing about more in the future, which we're getting really remarkable reductions in target levels in patients with all kinds of neurological diseases. The chemistry platform, like we talked about for some of the other applications earlier, is directly transferable applicable to -- from one drug to another within a chemical class. So what we've learned from SPINRAZA, it's a different mechanism than Huntington, is still directly applicable to Huntington, as it is to SOD1-ALS and C9 ALS and all of our other drugs for neurological diseases. We know that in Huntington we've demonstrated, in patients, remarkable reductions in mutant Huntington. That's durable, long-lasting and is well within the range that is predicted to show benefit based on a wealth of preclinical data. So it is directly applicable. We're delivering our drugs by IT. And we're delivering them infrequently, every couple of months, every 3 months or every 4 months. It depends on the program. So it's -- we're getting -- we're extending those intervals for treatment as well for our CNS programs. But we do -- we believe that this route of delivery is well validated with our platform.