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

Great. Thanks, everyone, for joining us. My name is Jess Fye. I'm a senior biotech analyst at JPMorgan, and we're continuing our virtual Napa Valley Biotech Forum with Ionis today. I'm joined by the company's CEO (sic) [ CFO ], Beth Hougen.

So maybe we can get right into it. Since Brett became CEO last year, the company has evolved its strategy and is now planning to commercialize some of its wholly owned medicines independently. So what's Ionis' strategy on which drugs it's going to commercialize? And do you still plan to partner some programs? And how will you decide?

Great. Thanks, Jess, and thank you for having us. We're happy to be here this afternoon. It's a great question, and we're so excited about the future of the company right now with such a deep mid- and late-stage pipeline. We're looking forward to having 12 or more medicines on the market in 2026. And so with nearly 20 drugs in our pipeline for their wholly owned, I think this is a great question. We're in a great situation today where we really have the entire spectrum of go-to-market approaches available to us, from global out-licensing to commercializing ourselves. And we intend to employ those various different approaches to maximize the potential of all of our medicines. I think those medicines in our pipeline, like pelacarsen and vupanorsen, that can really address millions and millions of patients are really best -- frankly, I think their best opportunity for success is in the hands of the big pharmaceutical companies, like we have with Novartis for pelacarsen and Pfizer with vupanorsen. Those companies have the organizational infrastructure, the reach globally to be able to run these very large cardiovascular outcome studies. You'll remember for pelacarsen, there's an 8,000-patient cardiovascular outcome study that Novartis is running. And they can do that. They've got the ability to do that. And for us, it's wonderful because we're not paying anything for that work to be done. So we are able to retain our resources, our people and our cash to be able to put towards those medicines that are better suited for us. And then we have, of course, with Novartis and Pfizer and others, the reach from a commercial perspective to be able to successfully commercialize a drug for millions and millions of patients. So we're excited about that. If the drugs are successful, then we also have the ability to benefit from the very lucrative economics with hundreds of millions of dollars of milestone payments and royalties, frankly, in the low 20% range. So that, I think, means that we have opportunity for tremendous revenue growth and earnings growth from those partnered medicines. For the rare disease medicines like TTR LICA and APOCIII LICA, we see these as medicines that are -- that we could frankly bring to the market ourselves. And we're in an enviable position in that we have a very broad, deep, wholly owned pipeline. And so with mid-stage and late-stage medicines in our wholly owned pipeline, we need to be thinking about what are those clinical data, how are those clinical data advancing, how are those profiles starting to shape up for those medicines, what are the timelines? We need to be very cognizant of our timelines, and we need to also be thinking about the competitive landscape and how that's evolving over the course of the development plan for these medicines. And all of those are going to play into our decision about the best go-to-market strategy for our rare disease medicines. Our focus is on neurology and cardiovascular as we've talked about before, but we've got other opportunities outside of those areas in rare diseases, frankly, with positive PKK data that we announced today that's an opportunity for us to be considering. I think what's really important to remember is that we have the commercial capabilities and the financial resources to be able to position our medicines for success, and that's a significant positive change from years past.

Great. So maybe related to that, how do the acquisition of Akcea accelerate your commercial strategy? And what particular insights, if any, have you gained from having that team back [ in-house ]?

Excellent question. We -- it was really interesting having full access to Akcea's commercial organization. And I speak not so much about the field force but really about the -- those functions like health economics and outcomes research, market access, the patient engagement teams, the medical affairs teams, their new product strategy team. Having access to those functions and be able to then put those really qualified commercial people to work on the Ionis wholly owned pipeline has been a big benefit to the company. Additionally, we were able to streamline the operations of the combined organization. We now only have one public company instead of 2, and that generated substantial cost savings. And those cost savings, as you know, we've been able to redeploy into our highest priorities and now make sure that we use those resources for our wholly owned pipeline for TTR LICA, APOCIII LICA and the others that we've been talking about. In terms of thinking about the insights that we've gained, I think one of the things that's been the most gratifying to me and, I think, to the entire leadership team, is just how seamlessly the R&D organizations at Ionis have integrated with the commercial organizations from Akcea and how together we've created these integrated project teams for the -- really for the benefit of these medicines and, ultimately, for the patients and being able to move these to the market ourselves. So I think that has been one of the most gratifying and interesting aspects of the entire integration process.

What about the Sobi agreement? What was the rationale there? And how does that benefit Ionis?

Yes, it's a similar rationale to the acquisition on, obviously, a smaller scale. What we did with the Sobi transaction was essentially restructure our European operations into a distribution arrangement, in which we continue to do -- to be the marketing authorization holder. We do all of the drug supply chain work. We continue to work very closely with Sobi on the global brand strategies, pricing, market access, positioning and also maintain safety, regulatory, all of those types of activities. Sobi then uses their commercial organization in the field. And what that has enabled us to do is, again, further streamline the combined organization and redeploy those substantial cost savings into our highest priorities.

Okay. And maybe just to cover a recent topical question and, I guess, recognizing you can't really speculate too much what will happen without the data, but can you just hit at a high level the different potential outcomes [ at least since ] there are different outcomes following Roche's further analysis of tominersen data?

Sure. I think, first, I want to say that this has been an incredibly disappointing outcome for us at Ionis but really for the HD community. And it's a drug that we've been working on for a long time. It's a disease that we've been very much invested in, in a community that we've become very close with. So to say that this was not the outcome we were hoping for or working towards is an understatement. I think, really, the way that we think about this is we have all of the same questions that all of you have, and we continue to have those questions. But to your point, we don't have the data yet. And that's going to take some time for those data to come in. While Roche has halted the dosing in the Phase III study, they continue to follow those patients. And so they continue to collect safety and clinical outcomes data from those patients. And they've paused the dosing in the open-label extension study, but they're continuing to analyze those data and potentially advance that study and continuing to execute on the PK/PD study. So there's probably 1,000 patients or more worth of data that needs to be collected and cleaned and analyzed and that's going to take some time. And until, really, those data are in hand and analyzed, I really feel it's too early for me to speculate on what next steps could look like or what the potential outcomes might be. There's just so much that we don't know yet that we really need to understand from these data.

Okay. Got it. Maybe I'll take this chance to just remind folks, if you want to ask a question over the portal, you can hit that blue Ask a Question button that will send it to me and I can ask Beth. Before we turn to the questions on the portal though, how are you thinking about the timing to refile the WAYLIVRA NDA with the FDA? And what other countries are you targeting in the near term?

So with WAYLIVRA, if you remember, it's approved in Europe, and it's been rolling out across Europe throughout the 2020 time frame. Sobi will continue to advance that rollout across Europe, now that the commercial organization is in their hands. As far as the United States is concerned, we're waiting to access data out of the U.K. to support the refiling. And the U.K. has prioritized COVID efforts over virtually anything else. And so at this point, we don't have access to those data. In the meantime, we're continuing to advance the Phase III study in FCS patients with APOCIII LICA as a follow-on for WAYLIVRA. And that Phase III study is going very, very well and expect to have Phase III data in the 2023 time frame. So right now I can't give you a definitive timeline for WAYLIVRA refiling.

Great. So we've got our first question on the portal. It's topical. What are the next steps for HAE? When can you start Phase III? In the Phase II, did you test schedules other than once monthly?

So we're -- first, let me say, we're really excited by the Phase II data that we reported this morning with our HAE-derived PKK LICA. Just as a reminder for folks, what we showed was 90% reduction in monthly attacks from the beginning of the study till the end. It was a 17-week study. And from week 5 to week 17, when we were really at steady state, we showed a 97% reduction in attacks and 92% of the patients in the treated arm were attack-free over that period of time compared to 0 patients in the placebo arm having attacks. So none of the patients in the placebo arm were attack-free over that same time frame. Safety and tolerability looked very good. And it's a once-monthly subcu, small volume injection, so very easy to take, very convenient for patients. So our plans at this point are to move as rapidly as possible into a Phase III study. We're really excited by this opportunity. And as far as what other regimens we tested, we'll be presenting the full data set at a medical conference later this year. So I'd rather hold on some of those questions until then.

Okay. Got it. Another question here from the portal. To the extent that you see ongoing value in the HTT lowering approach in Huntington's, are you tied to Roche? Is there a way to move forward independently with a follow-on candidate?

So when we do a partnership with -- for a drug like Huntington's, we license them the target. So Huntington's HTT is a target that is exclusively licensed to Roche. And so we would want to continue to advance forward with our partner.

Got it. Okay. Maybe switching back to my questions. What -- I guess, more broadly on the pipeline, what gives you the confidence that you can meet your goal of 12 or more medicines on the market in 2026?

So as I've said, we have a very deep mid- and late-stage pipeline. We've got nearly 20 medicines in Phase II and Phase III. And that's partnered and unpartnered. And they cover not only neurology and cardiovascular diseases but also some of these other opportunities like PKK and GHR, ENaC and so forth. So what we anticipate -- when we look across our mid- and late-stage pipeline, we anticipate just a regular cadence of Phase III data coming out just on sort of a wave after wave of Phase III data. And if those data are positive, you can imagine that, that creates just a regular cadence of filings and approvals and new drugs on the market. And so I think it's really that the fact that we have so many shots on goal and that we have historically very high success rates, when you combine those things together, we feel quite confident that we can achieve our goal of 12 -- at least 12 medicines on the market in the 2026 time frame.

So I guess -- so related to that, can you walk us through the key pipeline catalysts for this year?

Sure. Sure. So obviously, one of our key catalysts was our PKK Phase II data, which we announced today. GHR Phase II data for acromegaly patients is also due out in the first half of this year. We're expecting to report cystic fibrosis data or data in cystic fibrosis patients with our ENaC drug in -- at ACC in May. Also, additional data from our Phase II studies of our angiotensinogen drug in resistant hypertensive patients at ACC in May. And then as we cross over into the second half of the year, we're looking forward to data from a number of other medicines. But I think probably most prominently is the Phase III data for tofersen in SOD1-ALS.

Okay. Great. And I guess what's the [indiscernible], if there is one, from the tominersen update to your other neuro products? Specifically wondering if biodistribution were at play here, what risk could that suggest?

It's a great question. And I guess the best way for me to answer that is just to remind folks that we know that we get good distribution throughout the brain and that we get into all cell types within the brain. And I would point to a couple of different things to demonstrate that. First is, you may remember, we had autopsy data from SPINRAZA. In the early days of SPINRAZA development, unfortunately, some of those patients passed away, and their families gave us permission to do autopsies. And so we were able to see through those autopsies that we got drug in a variety of different parts of the brain. We knew we were getting drug to the spinal cord, to the cerebellum, to a variety of different brain regions. Now we don't get as much drug into the deeper brain regions such as the caudate, but we know we are still getting drug there because the brain is bathed in the spinal fluid. And so when we are able to test that, what we saw with Huntington's is about a 44% reduction in mutant huntingtin in the CSF, and we don't believe we could have actually achieved those levels of reduction if we weren't getting drug into the brain and well beyond the spinal cord.

Okay. Got it. You mentioned the 12% Phase III data coming in the back half of this year as kind of one of the key updates. What are your expectations for that Phase III readout? And what do you see is the efficacy bar in this setting?

Just as a reminder, in the Phase II study, it was a -- I believe it was a 3-month study, if I remember correctly. And we showed, particularly with the fast progressors a statistically significant separation between placebo and tofersen-treated patients. And we saw a trend towards separation in the non-fast progressing patients. ALS and SOD1-ALS is another one of those devastating diseases, for which there are no disease-modifying therapies today. And so we believe that if we can show -- even slow the progression of the disease through a statistically significant difference in the treatment arm versus the placebo arm that we would actually have a drug. Our hope is that we would be able to do more than just slow progression. But even if it's simply slowing the progression, that's a significant benefit for these patients. So we're looking forward to those data later this year.

Another question from the portal here, going back to Huntington's. Can you confirm that Ionis has delivered more Huntington's compounds to Roche? When they license a target, does that include all versions of the technology, LICA 2.0, 2.5, et cetera?

So what I can say is when we -- as I said, just to reiterate, when we license a drug, we license the target. We don't always license all of the various different chemical or technology advancements. In this particular case, I honestly don't remember what the contract says, so I can't really speak to that. But I -- what I would say is, both we and Roche are committed to the Huntington's community. And so we will want to find a path forward. If there's anything we can do to move forward and find a drug for these patients, we would want to do that.

Okay. Great. So maybe shifting back to ALS, how quickly could Biogen file an NDA for tofersen in SOD1-ALS?

They've said that -- they haven't given a specific timing for the Phase III data other than to say it's later this year. But I would expect that they would be able to file in the first half of next year for certain, given that this is such a devastating disease with such a significant need for patients. I'm sure that they would move very quickly.

Okay. Great. And for the Phase III ATLAS trial set to start this year in increased symptomatic patients with the SOD1 mutation, how long do you plan to evaluate those patients before you can assess for clinical benefit?

Biogen is running that study, as you point out, and they haven't given specific details about the study design. But what I can tell you is that there are biomarkers like neurofilament that predict disease onset. And so it will be possible, we believe, to be able to observe those biomarkers as the study progresses. And so we're really looking for ways of being able to predict the onset of disease and, hopefully, much like we do with SPINRAZA in the NURTURE study, treat early enough to ensure that patients don't ever actually develop their disease.

Got it. Can you give us an idea of the totality of the data we can expect to see for IONIS-ENaC-2.5Rx coming at ATS. What potential meaning does this have for other aerosol formulations in the pipeline?

So just as a reminder, this is a Phase I/II study. It's in CF patients, but it's primarily a safety study. We're not going to be doing lung brushings, for example. It's really not indicated in these CF patients. And so we're going to be looking primarily at, can -- is ENaC safe in cystic fibrosis patients. We know from the work that we did in healthy volunteers that we do get target engagement and we know that the drug was safe in healthy volunteers. So now we want to take this next step before we start a study in cystic fibrosis patients later this year to ensure that the drug will be safe in those patients. If we see -- we will be measuring and have been measuring FEV1 in these patients. If we see any potential signs, that would be really icing on the cake because it's not what the study is designed for.

And maybe coming back to one of the first drugs that we talked about, PKK-LRx in HAE. How should we think about development plans from here, assuming this data gives you confidence to move forward?

I think these data do give us confidence to move forward. I think everybody was pretty excited by the data. And so right now, what we're doing is really designing the Phase III study and also looking very carefully at our pre-commercial activities and outlining those and setting those 2 things together. We've got an integrated team of development and essentially new product strategy folks. As I had talked about earlier, HEOR, market access, med affairs, really a broad team of folks working together on the Phase III design and the pre-commercial activities to get us ready for potentially launching this drug down the road. And so I would say, stay tuned. We'll be releasing the full data from the Phase II study later this year at a medical conference and that's probably the best time for us to talk about the Phase III design as well.

Okay. Maybe just against the backdrop of a landscape that has multiple efficacious agents on the injectable side, a new oral entrant as well in HAE, how does Ionis kind of position a product like this or differentiate it within the HAE landscape relative to those other kind of effective injectables?

Our market research suggests that the product profile that we're seeing emerge with PKK, if it holds up in Phase III, would really have multiple dimensions. So first and foremost is, of course, the efficacy. And that looks to be at least as good if not better than the existing drugs on the market. Certainly, it's better than the oral, and it looks to be at least as good and possibly a little bit better than the most recent injectables that are on the market. And then we want to look at safety and tolerability and convenience for the patient. From a safety perspective, we know that this was -- this drug was very safe. It's just another one of our LICA medicines and has a safety profile very much like all of the rest of our LICA medicines. It's excellent. From a tolerability perspective, again, very, very sound profile. There were really no treatment-emergent AEs other than headache and nausea, and those were more prevalent in the placebo arm versus the treated arm. And then it's really about the convenience, the -- and then there'll be a final piece to this. These patients right now are taking a very difficult injection every other -- basically, every other week, every 2 weeks or so in order to control their attacks. And what we hear from them is it's extremely painful, and it's not very convenient because they need to reconstitute, draw up and then inject themselves. And so it's just a process for them. We can give them a once-monthly subcu, low volume injection, possibly with an auto-injector that would make this extremely convenient and essentially painless for them. And they can do that once a month versus every other week. And then I think the other step -- part of this, and we need to see this really play out in the Phase III study, is how long does it take to get to that steady state of 0 attack rate in the Phase II that happens by week 5, and from week 5 through 17, 97% of those patients were attack-free. That's substantially better than the existing injectables on the market today. We would want to see that play out, obviously, in the Phase III. But I think that totality of a profile, I think, would put our PKK drug in a very competitive position in the marketplace.

So you've talked about sort of cardio and neuro as products that you want to keep. This is a rare disease product, but feels like it doesn't necessarily fall into those buckets. So how do you think about this product and potential partnering?

You're right, it doesn't fit, but we -- one of the things we have said is that we have a number of medicines that are wholly owned. They don't really fit into our core focus of neuro and cardiovascular diseases. But we want to be opportunistic. And this is a medicine that right now looks attractive to us. It looks like it's got a profile that can be competitive. And so as one of the things we've said is we want to have -- we've got decision gates. We have the ability to be opportunistic. And we've turned over and passed through one of those decision gates with positive Phase II clinical data. We'll have more opportunities to continue to evaluate this drug as we begin to understand even better the competitive landscape and as we design and launch a Phase III study. And so our view is right now, we want to be opportunistic where it makes sense. Rare diseases certainly fits within an area that we can -- set of drugs that we can commercialize. And this seems like one that makes sense to consider moving forward on. So we're pretty excited about this right now.

Okay. Great. What about the C9 Rx program in C9 ALS? Can you remind us of the Phase I/II study design there and frame what would be considered a clinically meaningful benefit?

So that study is primarily a safety study, and it's still ongoing. So I think a clinically meaningful benefit in any of these ALS diseases, any -- this is a -- C9 is, as you know, the most prevalent genetic form of ALS. And so I would -- we would expect that a -- that any separation, any improvement in disease, slowing of disease progression would be clinically meaningful. In this particular study, however, we're focused primarily on safety. And so I would not expect to see clinical outcomes from this study necessarily.

Okay. Makes sense. Maybe shifting to cardiovascular, what do you see as the key advantages of AGT-LRx's mechanism in heart failure?

I think what's really important when you're trying to control blood pressure is to ensure that you can target as many -- the entire RAS pathway. And that happens with ACEs and ARBs, and they clearly have benefit. But in these heart failure patients, there's still substantial residual risk, and they're limited in their ability to take the maximally tolerated RAS inhibitors or to do combo therapies because of the renal toxicities. And so what we want to do is with our AGT drug in heart failure, where essentially AGT is in the liver and it doesn't have those renal toxicities and so it's a great opportunity to be able to increase the therapeutic index, get these patients -- these heart failure patients to have more controlled blood pressure without having the toxicities and the side effect profile that you see with the ACEs and ARBs. So we're going to start the heart failure study a little bit later this year and add that to the ongoing uncontrolled, treatment-resistant hypertension study that we have in process right now.

So how should we think about the timing for other Phase II data for that product in addition to the hypertension data coming this year? And how do you envision potentially progressing that asset into pivotal studies with multiple indications potentially available?

I think -- so just as a reminder, we're going to see the full data set at ACC or we'll be presenting the full data set at ACC from the 2 Phase II studies that we discussed top-line data from late last year. So you'll see the full data set from those 2 studies. We've got ongoing right now a Phase II in uncontrolled hypertension patients on, I believe, 3 or more existing medications, and we're going to start the heart failure study here pretty shortly. I would expect to see data from those studies probably sometime next year. And then the other study that we are getting underway here very shortly is a follow-on, actually, a drug -- 2.5-LICA AGT inhibitor that really could provide life cycle management and that it gives us a follow-on medicine, which would be even more potent than our existing AGT drug and the possibility for moving into an oral. So you can see how this could potentially create life cycle management and really extend the runway for this drug with these patients. As far as moving into Phase III, this is a huge patient population, millions and millions of patients who could benefit from an additional blood pressure medication. So I would say this is one of those that probably makes the most sense for us to look at a partnership, but we'll continue to assess that as we look at the data and advance the existing -- the ongoing Phase II study.

How should we think about timing for the ongoing SPINRAZA studies? And how do you see the potential for these trials to impact SPINRAZA's market position relative to Evrysdi and Zolgensma.

So the 2 studies that Biogen is running right now is the DEVOTE study, which is looking at higher doses of SPINRAZA and possibly even -- and they're actually adjusting the loading dose so that there are fewer loading doses. So you've got a bit better convenience dosing regimen for patients, so they're not getting dosed in the first year quite as often as they would have otherwise. Biogen hasn't talked about specific timing for these data, but I think it's really important to be able to continue to provide the most efficacy for these patients as we possibly can. And we know that SPINRAZA is efficacious. And we know that it's very safe. So DEVOTE allows us to test even higher doses and potentially being even more efficacious for these patients. The second study that's ongoing right now is the RESPOND study. And that study is in patients who had a suboptimal response to gene therapy. And we know from the clinical development plans as well as from the commercial landscape marketplace that gene therapy is not necessarily a one and done, that some of those -- for some people, those effects actually wane. And in spinal muscular atrophy, you just can't afford to lose neurons. You can't afford to lose function. And so the ability to take SPINRAZA when you start to have waning of effect for -- from your gene therapy is really important. And we know that, that happens in practice from anecdotal -- from stories that we're hearing anecdotally. This will be -- this is a study that Biogen is running that will test exactly that scenario. And exactly when the data are due Biogen hasn't said publicly, but I think it's going to just further strengthen the profile of SPINRAZA in the marketplace and allow it to continue to be the foundation of care. And we continue to see a bright future for SPINRAZA, and I think this just further demonstrates how it can fit in the -- how it can maintain its leadership in the marketplace.

Got it. Okay. We have a couple more questions in from the portal. So first, as we think about Ionis's partnership strategy going forward, should we think about continued one-off partnerships with leaders in their respective therapeutic areas? Or how does management and the Board think about a broader partnership with a strategic player as a way to more rapidly advance a group of assets?

That's a great question. I think our Biogen collaboration has been a very valuable relationship. And that it has enabled us to do exactly what we had set out to do when we entered into the broad collaboration, which was to create our own wholly owned neuro pipeline. And that's growing in -- as a development pipeline, and there is a -- just a huge research pipeline as well that's coming behind that to continue to feed our neuro pipeline. So there was some, I think, real benefit to that. I think it will depend on what a partner can bring to the table. I think in a lot of cases with our financial strength right now, we can continue to move forward and research in a variety of different therapeutic areas. We can build the development pipeline and advance the development pipeline using our own resources. And then when we do partner, we will -- we can command significantly better economics for each of those assets than we could as in a broad strategic research collaboration as we did with Biogen. So to do that type of a relationship in the future, it would have to be really, really strategic and have to be in an area where we don't have substantial expertise ourselves.

Okay. Makes sense. Another one from an investor here. The company has made amazing progress in antisense technology. It's a commercial biotech company, and there are only a few of those, but the stock is at the same level as it was in January 2014. Do you have any thoughts as to why investors don't appreciate these achievements?

It's something that we are very focused on and our Board is very focused on as well. I think our view is that as we advance the commercial strategy and evolve our commercial strategy, hold on to more and more of our commercial assets ourselves or our pipeline assets ourselves, that you will see substantial growth, and that will be reflected in the stock price. There's just so much within the company today. And I think it's very achievable for us. As I said earlier, to have 12 or more medicines in -- on the market in 2026, we've got a whole host of important catalysts this year. We've got catalysts next year and the year after. We've got the steady cadence of Phase III data and a deep pipeline to continue to advance medicines through development. And we've got the financial resources to be able to do these things ourselves and to really invest in the business. And frankly, we're investing in the technology as well. We're not sitting still. We've made a lot of important progress last year when we advanced pulmonary and we're able to show delivery of antisense into the lung. And we'll see more of those data at ATS, and we'll continue to advance a pulmonary franchise and potentially create an emerging franchise in that area. And you'll see more of that. You'll see us do more collaborations in research on LICAs, addressing new tissues and organs, where we'll be able to maintain a leadership role and continuing to look for complementary technologies as well. So I think there's -- I think, under our new leadership, there is a lot of forward momentum and a lot of opportunity, and I believe that you will start to see that reflected in the value of the company going forward.

Okay. Great. So just one minute left, so I'll leave with the final question we're asking all the management teams today. What's your favorite Napa Valley wine?

Oh my gosh. That's a terrible question to ask me because I don't drink wine. I guess, you know what, I have to say, one of our Board members actually has a winery in Napa, Colgin Cellars, and I would have to say that or I probably would hear about it in our next Board meeting. So I have to say it's Colgin Cellars.

Wise response. Thanks, Beth, and thanks, everyone, for tuning in to listen.

Thanks for having me.