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

Welcome, everyone. This is Josh Schimmer from the Evercore ISI biotech team. I'm very pleased to be joined by Brett Monia, Chief Executive Officer of Ionis; and Beth Hougen, Chief Financial Officer. Ionis' pipeline is really turning into a breathtaking journey through science. I've absolutely loved doing some of the webcast that we've done with Ionis scientists really digging into each of the programs in the pipeline and really understanding the nuts and bolts, the genetics, the biology and the commercial outlook. It really feels like Ionis is a very different Ionis this year than it was 2 or 3 years ago and 5 and 10 years ago. I know a lot of that is driven by this evolving platform.

So Brett, maybe you can just kind of give us the snapshot of how the antisense platform at Ionis has changed from year-to-year or 5-year intervals? And what it can do now that it couldn't before?

Sure. Happy to, Josh, and thanks for the invitation to be here today, and it's a real pleasure. Yes. I mean Ionis really is evolving rapidly, and the evolution is accelerating for us all aspects of the technology and the pipeline and even our business strategy. We're a very different company today. And in some ways, we're a new company because of all the success we've had recently and where we're moving to, new areas that we're moving into. Over the years, we've had many breakthroughs, but that have helped us accelerate the technology and the pipeline and so forth. It always begins with medicinal chemistry and basic research that we're really committed to here at Ionis, that really sets the foundation to make our drugs better and better generation after generation. And we're seeing that at the level of technology. Our chemistries are allowing us to go to very low doses today because the potency that they're delivering, our LICA platform, for example, across 15 or 16 drugs in the clinic are reproduced. We've shown great efficacy and excellent safety and tolerability. I have to say that's quite a breakthrough for the platform. And there's new LICAs coming. I would also say that another breakthrough over the last little bit has been local delivery, putting our drugs where they need to be. And the greatest breakthrough there, I would say, is in the CNS, where we pioneered and validated intrathecal delivery, that led to SPINRAZA and has led to Phase III trial in Huntington and ALS, and more than a dozen drugs in development for neurological diseases that I think sets us apart from really most, if not all, other companies in the neurodegenerative disease space. And I think that, that is another big part of the company's evolution. And then the third part of the evolution of the company, I think is very significant, something we said we're going to set out to do early this year in January, and we're doing it, is to then -- is to build the Ionis pipeline and to build our commercialization infrastructure, our capabilities and to begin to capitalize on the drugs that we discover and we develop to bring more -- to bring drugs forward into commercialization ourselves. So it's an evolution of the business model, in which we will be commercializing our own drugs going forward in parallel with supporting our partnerships that are moving on forward. And partner when it makes sense and keep drugs when it makes sense to keep them. So really, in many ways, Ionis is a different company today, and it's a natural stage in the evolution of the company, I would say.

Maybe you can talk a little bit about the latest updates around the PCSK9 program. I feel like this is a target that Novartis just paid like $2 million for a leading RNAi approach. What do you think you're going to be bringing to the table with this program? What have you shown so far? And what should we be looking for next year?

A very exciting program. This is the most advanced molecule of this chemistry that we're using for PCSK9, it's our Generation 2.5 chemistry, coupled with LICA, and that is giving us about 100-fold improvement in potency compared to Generation 2 chemistry alone. And it's this potency that we saw preclinically that got us so excited with AstraZeneca. To move forward on a PCSK9 program because our preclinical data suggested that we can have the most potent, most efficacious PCSK9 inhibitor of any, including drugs in late-stage development as well as drugs on the market today, and that translated to the results we are hoping to see in Phase I. And we presented at the American Heart meeting, a subQ once a month injectable, that was very well tolerated, like all of our LICAs, and is showing PCSK9 lowering and LDL-C lowering that supports the conclusion that this could be the best-in-class PCSK9 inhibitor of any. In addition, we're now in Phase II, we're in Phase IIb. We announced today the initiation with AZ of a Phase IIb study. And I can tell you that we also have completed Phase II that led to the Phase IIb study, and that data supports everything that I just said, and the conclusions we made at the AHA as well as supports the enthusiasm we and AZ have to move to this drug to Phase III as rapidly as possible. So we're in Phase IIb to start the -- to identify the Phase III dose, and we think we have a real winner here with this molecule.

And here, it looks like you're pursuing monthly dosing, as you indicated, why not look to try to extend to less frequent [indiscernible] is cycling every 6 months, is that not accomplishable? Or is that not a target objective?

It is accomplishable. We can go to less frequent dosing if we wanted to with our LICA platform. However, Josh, we've done extensive marketing research as has our partner AZ and others, and once you get beyond monthly subQ dosing, the commercial advantages diminish very rapidly. Monthly dosing is very convenient. If you think about how long a month is, and you have to take a small low volume injectable once a month, it's easy to remember, it's easy to do. And once you go to a higher dose -- once you go to less frequent dosing, you're going to have to go to higher doses. And we prefer to go to a very low dose, very low volume, subQ injectable once a month because there's no real commercial advantage to going less frequent today, at least that's what all the market research work that we have done says. So we could if we want to, but we like the profile where we are.

Yes. You've talked a little bit about the oral PCSK9 antisense, there's a little bit of data that you had presented at AHA for that program. Why advance the subQ as opposed to prioritizing the oral? And what should we be looking for from the oral formulation based on what you've shown in the preclinical setting?

The subQ program in Phase IIb is substantially ahead of the oral program. The oral program is in Phase I with AstraZeneca. It's the same molecule, only with a formulation that enhances bioavailability through the oral route. We get about 5% to 7% oral bioavailability and that, coupled with the potency of Gen 2.5 LICA, makes us and AZ believe that we're on the cusp of commercially viable oral delivery as a once-a-day tablet. Why bother the subQ? Again, once a month subQ administration is very convenient for patients and it's here now. We have -- the data that we have in the clinic is so compelling. We want to move to an outcome trial as rapidly as possible with AZ. The oral program, we still need to prove. We need to prove that we have the optimal formulation. We're getting the bioavailability we need. We know we have the potency because the subQ program has proven that. So now we just need to prove that we have the oral bioavailability. Once we do that, we'll march it forward along or we'll tweak it and make the oral bioavailability better with additional optimization of the formulation. So we still have some work to do there to prove delivery, but we think we're on the cusp of validating it.

Is the target profile with the oral administration to be able to get every bit as strong knockdown as with subQ? Or is there a compromise here that since it's oral, maybe you don't need to see as quite as dramatic efficacy and trade that off for the convenience benefit?

Yes. It's a great question. I don't believe that you can trade-off efficacy in cardiovascular disease. Our preclinical data that we presented at AHA showed matching LDL and PCSK9 reductions in preclinical models, including in monkeys to the subQ. And that's what we want to see because that's what makes this potentially a best-in-class molecule. So no, I don't think you'd compromise that efficacy just because the drug is more convenient. Patients that are on maximum dosed statins who can't control their LDL have a high-risk of dying of cardiovascular disease, and that's the number 1 objective. Get the PCSK9 down, moreover, get the LDL-C levels down into the safe range.

So there's actually been some interesting new formulation work for small peptides to enable oral delivery. Maybe you can talk a little bit about what you've been using so far in formulation? And what new levers you may be able to pull to get that bioavailability even higher?

Yes, we're working with a number of collaborators as well as doing quite a bit of work internally ourselves and working with AZ on new formulations. We're -- we think we even have the potential to get to weekly oral, an oral tablet, and we're working on that. The formulations we're using today are simple fatty acid that opens up tight junctions in the GI, very briefly and in a mild manner. That gives us the bioavailability we need and the drug gets into the blood. Is available to go to the -- and of course, the whole of the drug because it's a LICA goes to the hepatocyte. We also get a little benefit from first pass effects in the liver when we go this route, which helps us on the efficacy side of things. And yes, we are looking at other formulations, and we're well aware of some of the work that you just referenced, getting peptides by making them bioavailable using an oral route of delivery, too. So we're looking at all of that. And today, we have a simple fatty acid that we're using in the clinic, we have quite a bit of experience with. It looks well tolerated. And based on the preclinical data looks pretty good, but we have to prove it in humans.

And then given the vast potential of oral antisense, and if you can check that box, what made this the starting point? And you could have chosen any program, multiple programs to advance into the clinic, why PCSK9 as the first go?

Yes, there are several reasons. First, it was our most advanced Gen 2.5 LICA, so it's the first one to reach the clinic with that -- with the potency that we need to get oral -- commercially viable oral delivery. Second, Ionis and AstraZeneca put our heads together when we initiated a cardiometabolic collaboration several years ago, and we asked ourselves, could we compete in the PCSK9 space? And the question was, well, can we get a drug that's most efficacious? Maybe Gen 2.5 LICA could deliver that. And in addition to efficacy, how else can we differentiate from competition? So it's a highly competitive field. And then the question is, could we make oral work? So it was really based on the first Gen 2.5 LICA that emerged and the need to differentiate from a whole lot of other PCSK9 drugs that are out there or that are coming. And so far it's holding up. I would also add, though, that we have other drugs coming forward, notably from the Ionis pipeline that's non-partnered, where we're moving drugs and we're doing the preclinical work to move an oral program forward into the clinic, and we're hoping to move an oral -- a second oral program into development next year from the Ionis pipeline, and we're going to talk a little bit about that next week at our Investor Day.

Is -- if you crack PCSK9, does that mean you can crack everything else? Or is there challenges to the other targets that you'll have to continue to optimize in that?

The key is the potency that we get with Gen 2.5 LICA. And since the LICA drives the drug essentially exclusively to the hepatocyte, it is generally applicable for all hepatocyte targets because the LICA, it's a platform. So as long as we get that potency, and the target is a hepatocyte target, it should translate. So you can think of programs like TTR or PKK or angiotensinogen and those types of programs, where the hepatocyte is where the business is happening, and we should be able to do it and we're working on all those things. Could we use oral for -- take an oral strategy for other targets and programs outside of the liver? It depends on whether we get the potency that we're getting in the liver. And we are working on several new LICAs that are coming forward rapidly actually. And as long as we get the same type of potency that we're getting in the liver, you would -- and as long as that LICA is stable in the GI and can be inter coded and all of that, you can see how we can get there too with other drug programs outside the liver.

How do we think about some of the risks of translating the oral delivery from the preclinical into the human setting, do we worry about inflammatory changes or solubility or absorption changes? Like how do we think about what changes from a monkey GI track to a human?

Well, really not much concern with inflammation or any reactions. I mean we've done quite a bit of work with this particular formulation. And we haven't seen any significant irritation in the GI or anything like that. We've done in dog models, which are a common model to be used for oral when characterizing oral delivery, but also in nonhuman primates, as you said, and we're getting data in humans now. Really, the risks, I don't really see any, from a safety or tolerability standpoint because the GI, it's a simple fatty acid and it's well tolerated. What I think where the risks are, do we get the bioavailability that we need to make it commercially viable. And we just have to determine that. But we're not sitting still. As I said earlier, we're working to optimize our formulations to -- even if this does work and it is commercially viable to make it even better in the future. We think oral is something that's going to be with us for a long time.

Maybe just a quick question now on the CNS portfolio and with the backdrop of this whole discussion about just the extent to which the platform has evolved and improved and honed over the past years. There are a number of programs now that are targeting cerebral cortex will get -- or cerebrum, moving away from the spinal cord. We'll get our first look presumably from the Huntington's program. And if that shows that you can unlock the brain, and it feels like you've got like 5 or 6 programs already that effectively derisk because you've shown -- you've proven delivery and target. But let's say, in the scenario, though, that we're not seeing as strong results from the Huntington's program coming back to this game of continuing to optimize on the constructs and delivery. What would the next wave of CNS targeting constructs and programs look like?

Well, we are confident that we can hit all brain regions in the spinal cord. And I think that the data that will be coming out next year and for the next several years will really hammer that home. We are seeing substantial reductions in mutant Huntington expression in CSF, which, based on all our preclinical modeling work as well as Roche's, indicates knockdown mutant Huntington, not only in the cortex, but also in the deeper brain structures. And that correlates with the distribution that we see in those structures as well. But we'll see what the clinical endpoints tell us when the Phase III results have come out for Huntington as well as our MAPT program for tau, which we're going to have results from next year as well, and so many other programs that you -- as you mentioned, that are coming forward. With that said, to get to your -- the other part of your question is we continue to advance the neurological platform as we are doing everywhere else. We have -- we are improving the existing platform, the existing chemistry, that is getting us to dosing biannual for intrathecal delivery for the existing platform, and we're working on new chemistries that we think can get us to annual dosing intrathecal as well. And finally, we're working on LICA strategies. LICA strategies that have the potential to cross the blood-brain barrier. That's really what we're focusing on there. And for systemic applications, the CNS. And the results are coming, and the work is coming forward nicely in all 3 of these areas. We think we'll represent even further advancements in our neurological platform to make our drugs look even better.

Super. I think that's the end of the time, and covered a lot of ground on the -- particularly the oral, which I know is where there's a lot of growing interest and certainly far more opportunity for that platform as we see more of it. So looking forward to that, and just the endless number of data points and updates from this expansive Ionis pipeline and as well here in the event of the next week. So Brett and Beth, thank you so much for joining us.

Thank you, Josh. It was a pleasure.

Thank you.

Take care.

Take care.