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

Good day, everybody. Thank you for joining the Bank of America Annual Healthcare Conference. My name is Jason Gerberry. I'm one of the biotech analysts at BofA. And I am pleased to be introducing our next company presenter, Ionis, and CFO, Beth Hougen. So Beth, thanks so much for joining us, first off, at the conference today.

Thank you. Thanks for having us. We're pleased to be here.

Great. Great. So look, Ionis is one of the premier companies in the RNA space in terms of developing a platform, ASO platform. Maybe can you just set the stage in terms of how the company's capital allocation strategy and just broader strategy has changed in the last few years? The Sobi partnership is one example of a change. There's been messaging around looking to take assets through -- wholly owned assets to development, whereas maybe historically, it was a bit more of a partnership model. So maybe if you could just set the stage on kind of where Ionis is going from a corporate strategic perspective.

Sure. I'm happy to. It's interesting. We've spent a lot of years in -- from foundation -- from our founding to the recent past really, to your point, pioneering RNA-based therapeutics. And that's a phenomenal undertaking. And we've built a deep pipeline of drugs for transformational-type drugs. And so today, with the new leadership, with Brett Monia, who's our CEO, he took over at the beginning of 2020, our focus is on really maximizing the value from all that has been created up to this point, so maximizing the value from the deep pipeline. And what that means for us today is really focusing on developing and commercializing our wholly owned assets. Our focus is primarily in neuro and cardiovascular diseases but also primarily in the rare disease space. And we've got a deep pipeline, a very rich pipeline of late-stage Phase III assets that we're really excited about and we think are going to be the next key value drivers for the company. And that'll set up -- just be part of this regular cadence of Phase III readouts. And so our strategy is really to take our wholly owned pipeline to continue to advance it, to expand it and to retain substantial value by commercializing many of these medicines ourselves. And our focus today is primarily in TTR LICA for polyneuropathy and cardiomyopathy as well as in APOCIII LICA for FCS. And very recently, we announced we're going to move into a broad patient population there for severe high triglyceride patients and then, from there, continue to build out our commercial capabilities for other medicines in our wholly owned pipeline. So we'll still partner as it's appropriate. We have a number of large patient population drugs in our pipeline. We think the value with a big partnership, a big pharmaceutical company, makes a lot of sense, and we'll continue to look at those types of partnerships for our broad patient population drugs. But we're excited to be commercializing ourselves, building capabilities accordingly.

So is the idea that maybe in some of these more broad-based medicines where you'll still consider partnerships, will that activity generally be driven by a partner engaging you guys? Will you still do discovery work and look to monetize assets through a partnership model as well as sort of, in parallel, be looking to get out your own ASOs for areas where you can bring those to market?

That's a great question. I think maybe -- so think about it this way. There's tremendous interest in partnering with Ionis, and that has really accelerated over the last number of years, particularly with the advancements we've made in our technology. And certainly, SPINRAZA has been a big part of that with the success that it's seen in the market. And so there, we're constantly engaging -- constantly getting inbound calls from big pharmaceutical companies about our technology and our pipeline. Our view is that we want to, to the extent possible, hold on to our drugs as long as we think it's feasible to be able to maximize value when we do partner. And so the way to think about it is, historically, we've really partnered just about everything, for late-stage development and for commercialization. And today, we have the whole spectrum of go-to-market approaches at our disposal. And so there will be times when we'll take a drug forward, and we'll reach out to pharmaceutical companies to partner. There may be times when they come to us and suggest a partnership opportunity. And then there will be other opportunities where we really want to commercialize ourselves, where we feel we have the expertise and the capabilities and the capacity. And we'll hold on to those medicines ourselves. As far as research collaborations, we've done those very successfully in the past. And there may be opportunities for those going forward in new therapeutic areas or new areas of the science that we feel that a big partner could bring significant expertise to. But right now, those we will be very selective about. And if you've noticed, we typically -- when we do partner, we tend to partner, for multiple times, with the same pharmaceutical company. We like to build deep relationships and build off of those relationships with companies that we work very, very well with and that understand our technology and work well with us and with our research and development organizations.

So I just wanted to come back to your comment about go-to-market opportunities and what that looks like. And so I imagine, on the one hand, it probably looks like rare orphan, right, where you don't have to have a big commercial infrastructure. Rarely is there synergism between orphan indications in terms of the commercial infrastructure. Maybe it's small orphan markets where you can kind of build franchises. Just in terms of like strategically, as you think about the pivot eventually to commercial, maybe what does that look like? What are some of the things that you want to find in assets and how you ultimately maybe could derive some sort of leverage in the future?

Sure. So we've been talking about this shift to commercializing our wholly owned medicines ourselves for a little bit now. And our focus is primarily in our deep, durable franchises in neurology and cardiovascular. And to your point, there are a number of reasons for our focus in those areas. First and foremost, we have substantial expertise in both of those therapeutic areas. Secondly, we have deep pipelines already in mid-stage and late-stage development. Third, we have substantial research -- sorry, substantial research capabilities and capacity in those areas, deep pipelines in research that will continue to feed our development pipelines in those 2 therapeutic areas. And then we get synergies from a commercial perspective in both of those therapeutic areas, and that's very important to us. And so you'll see our focus in neuro and cardiovascular continue to be something of importance to the company. For neuro, we recently expanded our wholly owned pipeline by starting a Phase III study for a FUS-ALS drug, and that just adds to the TTR LICA polyneuropathy, which is a neuro asset that's in Phase III development. And also, we started a pivotal study for Alexander's disease drug. And so we have a number of late-stage assets in neuro and a deep pipeline coming behind that. On the cardiovascular side, we have obviously TTR LICA for cardiomyopathy that should be -- that's advancing in a pivotal -- or sorry, in a Phase III cardiovascular outcome study. And we also have APOCIII LICA for FCS, which is advancing in Phase III. And we're going to be starting the broader patient population severe high triglyceride Phase III study. So again, tremendous focus in cardiovascular as well. So that's where our real focus is, and we'll be opportunistic beyond that. PKK LICA is an exciting drug that had compelling Phase II data very recently, and we're looking at the business case for that today. And while it doesn't fit into neuro and cardio, we think there might be real opportunities there as well.

Okay. How does the dynamics with SPINRAZA affect how you guys are operating? And in terms of -- obviously, you're tracking the competitive dynamics of that marketplace. And if -- what do you see that's perhaps within the pipeline in the near to medium term having like the best potential to maybe mitigate any headwinds that you might see from that royalty stream?

Yes. So I guess I would start by saying we continue to see -- and Biogen as well, we continue to see a very bright future for SPINRAZA. It's the foundation of care for these SMA patients. It's a market leader and continues to be a market leader. The Q1 results, I think, demonstrated again how much of a market leader it really is in that it had growth over Q4, particularly outside of the United States. And Biogen is continuing to help shape the decision for these patients with the DEVOTE study and the RESPOND study. So looking at higher doses of SPINRAZA in the DEVOTE study and also looking at SPINRAZA after patients who didn't do as well on gene therapy, going on to SPINRAZA and looking at those patients in the RESPOND study. So we continue to see a very bright future for SPINRAZA. That being said, we think following behind that is -- are just a number of drugs, as I talked about, our TTR LICA, APOCIII LICA, tofersen for SOD1. We'll be reading out -- in SOD1-ALS, we'll be reading out in the fall. And so if you just think about tofersen for SOD1-ALS in 2020: One, Phase III data; then you've got TTR LICA for polyneuropathy Phase III reading out in 2022. We've got APOCIII LICA for FCS in '23, potentially TTR LICA for cardiomyopathy in '24, pelacarsen for Lp(a) in '24 and so forth and so on. And I think you can get the sense of this cadence that I talk about, about regular Phase III data readouts that are, we believe, going to continue to build on SPINRAZA's commercial revenues and build off of a very solid base of R&D revenues that we have with our partnered programs.

Okay. Okay. Has -- have these recent changes at all affected how you focus R&D resources within the company? You have so much going on. I'm just kind of curious how you guys think about allocating resources, in particular, in view of sort of an evolving future commercial lens for the company.

It's a great question. And we've taken a number of steps over the last year or so, particularly the last 6 to 8 months, to really focus the organization. And we did that through the Akcea acquisition initially. And then we did our Sobi distribution agreement in Europe, and we expanded that very recently to North America for TEGSEDI. And those were all opportunities for us to really focus the organization, become a much more efficient and stronger organization and to take the cost savings that we realized from those transactions and redeploy them into our highest-priority drugs. And really, that meant redeploying into this wholly owned pipeline, the drugs that I've been talking about this afternoon with you. PKK LICA is another one, and there's a whole host of wholly owned medicines in mid- and late-stage development that we're focused on. And then building the commercial capabilities that we need today to ensure that we're doing all of the precommercial work necessary to ensure successful commercial launches when each of these medicines gets to the market. And then continue to advance the technology and the reach of the technology, so really stepping back and investing internally for that future revenue and earnings growth.

Got it. Okay. So you did talk a little bit about HAE and the recent data that's been made available. It looks pretty competitive, we think, with standard of care. It has some advantages in terms of frequency of delivery. The -- I guess the one question I get a lot from investors is it would seem as though Takeda has set a pretty high bar from an efficacy perspective and that, that would be pretty tough to beat in terms of the attack rate. So I guess in lieu of all that, I guess one of the common questions is, can you win in a market like this just on primarily convenience or less frequent administration? Or perhaps you guys think that the story hasn't fully been elucidated yet and there are some other aspects of your ASO that will help -- or come to bear in this story?

We think that the Phase II data we demonstrated for PKK LICA was very compelling, and that that profile was actually quite competitive with the existing therapies on the market. And there's a -- and it goes beyond just convenience and dosing administration. It really starts with efficacy. These patients demand superior efficacy. They are really, really afraid of attacks. And so there are really a 3-pronged view of efficacy from our perspective, and this is really informed by a lot of market research we've been doing recently related to this drug. So first and foremost, the prevention of attacks, the ability to prevent attacks and the fact that we were able to get a very significant number of patients to the place where they had absolutely 0 attacks in that week 5 to 17, that's really important. So preventing attacks, ensuring that they can -- these patients can live their lives free of the worry of an attack is very important. Secondly, a fast onset of action. We were able to see an attack-free rate really after about a month or so of dosing. And that's in contrast to the existing therapies, which I think had about a 2.5-month onset of action. And so again, the sooner you can get to that attack-free place for these patients, the freer they are to live their lives. And then third, the reduction of acute therapies. The lack of a need for a rescue therapy or an acute therapy is a very important part. So in our view, you've got really 3 critical efficacy measures that determine maximum clinical efficacy, and we were able to hit on every one of those. And in our view, we actually exceeded the profile of the existing therapies. And then on top of that, we have the significant advantage of the dosing convenience. And that's just -- it's more than convenience. It's really the fact that these patients are -- they need to be compliant in order for them to really get the maximum benefit from their drug. And taking a therapy every other week that is very, very difficult, painful, it really means that they're not going to be as compliant as they should be and, therefore, not getting the real benefit from their drug. And so being able to administer our PKK LICA drug once-monthly, subcu, very small volume, low-volume dose with an auto-injector really means that, again, you've provided this substantial efficacy, freedom from worry of attacks and convenience of dosing so that they can live their lives and not have to worry about their disease. And so we believe that this profile, if it holds up in Phase III, we believe that we have a very competitive product.

What are some of the factors that make this like -- why isn't this a no-brainer for Ionis to bring all the way forward to market? We've seen small biotechs like Dyax and VERO Pharma bring medications in this marketplace. So it hasn't been like the domain typically of large-cap biopharma. So just kind of curious maybe the argument for or against keeping the asset in-house.

Yes. I think that it's something that we're looking at very seriously right now. We've -- with these drugs that are outside of neuro and cardiovascular, we want to be opportunistic. We want to make sure that we're making the right decision for the company. There's a couple of things that we think about. One, the clinical data. And clearly, we think that this has very positive Phase II data that supports moving rapidly to Phase III, and we are. And then we want to look at what's the business case. What is it going to take for us to be able to ensure that this drug is commercially successful? And what we know is that patients -- that we're going to need to help them understand why switching to this drug is going to be in their best interests. And so we're actually designing a Phase III program right now that will help us position this drug in the market and help patients and physicians understand how to think about switching from current therapies to our new PKK therapy. And so we're working on the business case today, in parallel with moving very quickly to Phase III. We hope to get that started later this year or early next year at the very latest. We're actually looking forward to updating folks on our path from a commercial perspective a little bit later this year as we complete the work on the business case.

Okay. I would imagine your upcoming FDA meeting would seem pretty straightforward. When we saw Takeda's, what is it, Takhzyro, I can never pronounce it right, but those -- that wasn't required to go head to head against CINRYZE. So I presume that you're in the domain where, at least in the U.S., you can still run a placebo-controlled trial for approval. And that was a message that was imparted on your 1Q update. I guess the question would be global harmonization. Would European regulators perhaps require you to do a head-to-head? And is that sort of a factor of consideration when you think about the investment needed to maximize the asset fully?

So we believe that -- we're not expecting anything surprising in our end of Phase II meetings or our scientific advice meetings, and we're moving rapidly with 1 Phase III study. That's what the competitors had for approval. We think that a placebo-controlled, single Phase III study should be sufficient. But as I said, we're also building out the Phase III program to ensure that we are putting together a plan that's going to enable the commercial success. And so that we've got what we need to really help the physicians and patients understand how to think about our drug in the treatment landscape and how to switch from one drug to our drug successfully. And we think that's important from a commercialization perspective. So don't see any hurdles from a Phase III design. In fact, we'll look forward to sharing that a little bit later this year when we share the full data set from the PKK Phase II study.

I guess it almost sounds like you need to reach the patient, and perhaps DTC advertising might come into the equation. And thus, that might be sort of a variable with the selling and marketing investments to, as you say, get the most out of the asset. And do you guys think about the business analysis?

I don't want to get too far down the path of what our commercial launch plan might look like. But you're right, I think the key here is ensuring that patients understand that switching is going to give them a much better outcome and a better control, better convenience and really allow them to live their lives more fully. And we want to make sure that we've got the clinical data. And we do all the market access, all the HEOR efforts, all of those sort of precommercial activities to ensure that we can be successful when we launch this drug. And we'll talk more about that as we roll those things out. It's a bit early for us to go into too much detail today.

Sure. Sure. Okay. Maybe shifting gears to AGT for uncontrolled hypertension. Just curious, what are you hoping to learn incrementally about the -- from the ongoing Phase IIb that will ultimately help inform final registrational trial commitments there? It seems like you've got an active drug. But just maybe can you talk a little bit about sort of the next milestones before you consider moving into pivotal?

Sure. So we're in the -- a Phase IIb study right now with our AGT drug for uncontrolled hypertension. And what we're really trying to do in that study is it's designed to be a proof of concept to determine really what the right reduction of AGT is in order to get the maximum reductions in blood pressure. And so we're looking for dosing for the Phase III study, and we're looking at a variety of doses. And that's going to be important. Typically, in these Phase IIb studies, what you're looking at is how to dial in your dose. We're also conducting this study in really that set of patients who are most at risk. They're on 3 medications. They're still uncontrolled. And so this is a very sick patient population. And we want to make sure that we understand how best to dose with our AGT drug so that we can maximize benefit for these patients. And then we can move that into a Phase III study.

Got it. And it's pretty clear, I think, that from regulators that, at least within hypertension, this is an area that you don't need outcomes trials, that blood pressure is a sufficient and registrational end point. But I just wanted to confirm that's kind of how you guys are thinking about sort of the ultimate pathway here.

It is. It is exactly. We believe that the primary end point would be blood pressure reduction, statistically significant reductions in blood pressure. And that should make a clear path to a Phase III study.

This is certainly an area that, I think, gets a lot of focus. Is this, would you say, is in your wheelhouse of potentially bringing to market for Ionis? Or is this more of a partnership candidate longer term?

I think that you could see this -- we can see this more as a partnership candidate. This is a patient population that's millions and millions of patients. And I think that the value from this drug could be maximized by putting it in the hands of a big pharmaceutical company that has not only the development capabilities and capacity for the -- for very large Phase III studies, but probably, at least as importantly, the commercial reach. Because these patients are going to be treated by a variety of different physicians. We want to make sure that we've got really the commercial reach across the world to get this drug out to the hands of patients. And I think a big pharmaceutical company, they already have that type of commercial infrastructure and capacity. For Ionis to build it would mean really redirecting resources from opportunities that we think are better suited for us internally. And so we would look to this as a good partnering opportunity.

Okay. And I guess one of the other ones you mentioned, TTR LICA, as we think about the current TTR silencer space right now, what do you think is the key to shifting the competitive balance with Alnylam in the market? Do you think as we go to the LICA formulation, they have their longer-acting approach? Do you -- I imagine, convenience is not going to be the driver here. Ultimately, do you feel like this is all going to come down to the outcomes data in cardiomyopathy? Maybe if you can just talk about how you guys are starting to see the swing factors that are most important once those programs mature?

Yes. So I think we feel very strongly that we've got a strong drug, a great drug in TTR LICA. I keep having to remember to say eplontersen. We've got its new generic name. And so we've got a great drug in that. And we've designed the Phase III study in cardiomyopathy to really ensure commercial success against, first and foremost, tafamidis. Because if you think about it, with Pfizer developing the market in cardiomyopathy today, tafamidis is going to be really the first competitive hurdle for the silencers. And so we feel confident that we have a Phase III design that's going to allow us to do that. And then I think from there, we feel like we'll be able to compete very effectively with the other silencers in the market. And it's a huge market opportunity. I think it's in excess of 250,000 patients. Right now, Pfizer speaks of it as a $10 billion market. I think that's going to only continue to grow. So I think there's room for multiple players. And I think the design of our Phase III study should put us in a really strong position to be able to compete very effectively in that market.

Got it. All right. Well, I know we're up against our time. But Beth, thank you so much for joining us at the conference and really appreciate your time and insights.

Thank you. It's great to be here. Thank you.

All right. Well, with that, operator, we can wrap up the call.