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

Good afternoon. Thanks for joining us. I'm Salveen Richter, biotechnology analyst at Goldman Sachs, and we're pleased to have Ionis with us. And with us from Ionis is Brett Monia, CEO of the company. Brett, thank you for being here this morning -- this afternoon.

To start, could you walk us through the outlook for the remainder of 2021 in terms of key events and data catalysts for the company?

Sure thing, Salveen, and thanks for the invitation. It's a pleasure to be here today. Yes, quite a number of news coming out of Ionis projected for the second half of the year. Data readouts and as well as new study starts. Of course, the most exciting data readout that we're really looking forward to is the Phase III readout for tofersen in SOD1-ALS. This is a readout that we're expecting in the fall of this year. And depending on a positive outcome, we're hoping this to be our next commercial product. In addition in the neuro area at the Alzheimer's meeting in July, AAIC, we have a presentation on our Phase IIa program for MAPT in mild Alzheimer's disease patients. And we could talk about what will be presented more -- later, if you wish, but look forward to that. The full data set from our hereditary angioedema program in which we tested our PKK LICA drug, our prekallikrein inhibitor. We shared top line data earlier this year, but we want to get out of the total data set in the second half of this year, and we're very excited about that program too. In addition, the growth hormone receptor proof of mechanism study and some of the open-label extension study from that study in patients with acromegaly. We're going to try to find a forum to share results from that in the second half of the year. And those are the data readouts that we've stated publicly. In addition, we have a strong cardiovascular pipeline. So keep an eye on ESC and the American Heart Association abstracts, need to be accepted before we start talking about this, but it was a big meeting for us as well. As far as study starts in the second half of this year, we already had quite a number in the first half, including some pivotal studies, but we're planning an additional -- at least one additional pivotal study in the second half of the year. Our APOC3 LICA drug. We plan to start Phase III in severe hypertriglyceridemia patients, the sHTG patients. In addition, we're planning to start the first inpatient Angelman syndrome study for neurology in the second half of this year, and we're working really hard on getting Phase III study up and running for PKK LICA. No promises to get it initiated in the second half of this year. We're trying, if not, it'll be early next year, and that's something to keep in mind on too. So I think quite a number of data readouts and study initiations play.

Right. Maybe just start on technology here. Can you provide us with an updated outlook on ASO next-generation technologies given the continued optimization here. Where does the cumulative safety profile stand for Gen 2.5 LICA? Are there diseases where ASOs offer an advantage over other technological modalities? I guess, 2 separate questions, really.

Yes. So first, on the next-generation chemistries and platform. Today, we have 14 of our Gen 2 -- or 13 of our Gen 2 LICA drugs in development today. And they are in Phase III, Phase II development and earlier development. More than 3,000 patients today have been treated with our Gen 2 LICA drugs. And 1/3 of those or so, more than 6 months. All have shown very exciting, impressive potency for target engagement, safety and tolerability as a once a month subcu injectable. So we're very excited about this part of the platform. As I said, quite a number of programs and several of them in Phase III development that we expect to read out in the next year and each year coming forward. So that's a key aspect of the next Gen -- next sort of chemistry. In addition, we're beginning to get more and more experience with Gen 2.5 like chemistry. We have 4 drugs in development today. It's a tough hurdle to beat Gen 2 LICAs because they've shown such great efficacy and tolerability. But what Gen 2.5 LICA does for us is it further improves potency. Allowing us to go to even lower doses and the potentially even less frequent dosing as well. Our lead program with Gen 2.5 LICA is our PCSK9 program with AstraZeneca which has shown really -- has really delivered on the potency that we hoped 2.5 LICA would deliver on. This has a potential to be the best PCSK9 inhibitor in class -- of the class. And AZ is moving that forward in Phase IIb now and potentially Phase III next year. And then we have other Gen 2.5s. And the advantages there are the potencies that I mentioned earlier, even lower doses, allowing us to use even lower doses. As far as differentiation into -- from other platforms. I think it's pretty straightforward with small molecules and antibodies, the advantages of oligonucleotide therapeutics, the drugability of targets that are not druggable with small molecules or antibodies. And the specificity that you can achieve the small molecules cannot achieve. The invasive, the convenience of once a month subcu administration or less frequent and so on. As far as other oligonucleotide platforms, I think our platform is in a very enviable position of being broadly applicable in many organ systems, especially in the CNS, where that complements very nicely our ability to target liver and kidney and immune cells and other -- and other cell systems as well. Whereas double-stranded oligonucleotide approaches are pretty much limited to the liver today in hepatocyte targets. So in there, I see the profile as being very similar, quite honestly. And so I think that's -- and that's where additional generation chemistries and where we're headed with the platform, it's new LICAs. And we can talk more about that if you wish later, but we're developing new LICAs to open up new organ systems, new muscle systems like we did in the liver.

Great. And in the past, you've mentioned that you're looking at potential complementary technologies, what is your current thinking on this front?

So my -- 1 of my strategic goals for the company -- one of several key goals for the company looking forward is to diversify our drug discovery capabilities, our platform capabilities and that will come in different forms. The next stage would be partnerships, collaborations, internal investments, which we're doing extensively now with new chemistries for targeted delivery. It's very important to expand the scope of what -- of the types of diseases we can tackle, for example, diseases that are difficult to tackle today with our current platform or impossible. And then in the medium to longer term, it's looking at new platforms. Platforms that can do the same thing to be able to allow us to tackle diseases that are not -- or difficult to approach -- or not approachable with our current platform. Gene upregulation is an example where we can do this. We can target loss of function diseases like SMA, obviously with SPINRAZA, but they're harder to find with opportunities to do that. And an example of where we can complement our platform would be in approaches that can target more easily loss of function diseases. We have a team. We're evaluating opportunities and investing in these areas already. And so stay tuned, we'll see how this evolves over time.

Perfect. And you've -- I guess, you've taken a different approach in terms of managing the portfolio. How -- versus what's been done in the past and looking at when to partner for value inflection points and what to keep in-house per indication, what will drive the decisions on collaboration on the Board.

We -- you're absolutely correct that one of -- another one of my strategic initiatives is to evolve our business model. And what I mean by that is to build out the Ionis wholly owned pipeline and to identify those assets in the pipeline that we're going to bring to Phase III into the market and commercialize ourselves. Assets that we think will bring the greatest value to the company, to all stakeholders going forward. Our focus initially would be in rare diseases, but not exclusively, we'll also consider ways to get into more broader indications as well. Today, in our wholly owned pipeline in the clinic alone, we had 8 drugs that are in our key franchises, neurology and cardiometabolic. Obviously, launching 8 drugs is a little impractical to get started off with. So we're going to need to identify those assets, and we're well along the way. Then we're going to prioritize and bring to market ourselves. And then we're going to think very carefully through which assets and when we would want to partner and with whom, which partners will bring the greatest value to those assets? So we really are in a very strong position to have such a rich pipeline to be able to pick and choose those assets that we think will bring the greatest value and to commercialize them while we strategically partner. Obvious choices to partner would be really Phase III studies in commercial forces that would be really large investments, right? Let's say, 1 booking would be hypertension, angiotensinogen, right. Where the Phase III study alone, not to mention the commercial organization required to really maximize the value of an anti-hypertensive for refractory hypertension to be enormous. It's something we'll seek a partner with at the right time when we achieve the value inflections that we think we deserve to achieve before partnering. Other programs will be dependent on synergies right. We're going to want to work in areas where the assets we commercialize ourselves offer synergies and workforces and commercial forces that are more manageable. And then we'll look to partner other programs. But clearly, today, our focus for the drugs we'll keep ourselves will be in the -- principally in the rare disease space, in the cardiometabolic and in the neurology areas.

Okay. Just starting with your late stage portfolio, tofersen and SOD1-ALS is currently in a Phase III trial with the data in the second half, as you mentioned. Can you recap the prior data and comment on how you're thinking about read through to the Phase III and what you would consider as clinically meaningful data?

Yes. We're very excited about our late-stage pipeline today -- with today, 5 drugs and 6 Phase III studies in process. And as I mentioned earlier, with the readouts and study starts, we're expecting more Phase III in the second half. Tofersen is the furthest 1 along. It's -- it's being developed for ALS due to mutations in the SOD1 gene. So it's a genetic cause of this form of ALS. The Phase I/II data that you referred to earlier was very compelling. We're targeting the root cause of the disease. We've shown SOD1. We've shown that we can lower -- significantly lower production of SOD1 in patients with SOD1-ALS. More than that, in that study, which is a relatively short study, 3 months of treatment. We were able to show biomarker reductions, neurofilament light chain, which is highly correlated with ALS disease progression and very strong trends in slowing progression of disease compared to placebo in -- as measured by what we call the ALS Functional Rating Scale, which -- and also the respiratory function in patients. And in addition, in a subset of patients in that study who have mutations that cause their disease to progress even faster over -- which is relevant because 3 months is only 3 months, right? So you're going to want to compare treatment versus placebo over a short period of time. You want your placebo group to be able to differentiate from the treatment group more easily. The fast progressors do that and the results we saw on slowing the disease progression were even more impressive for those fast progressors. How does it read through to Phase III? Well, it's the same primary endpoint -- clinical endpoints. I should say, it was used in the Phase I/II, the ALS functional rating scale as the primary endpoint. Respiratory function would be a key secondary. The study is twice as long. It's 6 months instead of 3 months of treatment. It will have fast progressors in it as well as the standard regular progressors. And the goal is to show statistically significant benefit in ALS Functional Rating Scale compared to placebo over the treatment -- 6-month treatment option. The study is fully enrolled and is due to read out this fall, as I mentioned earlier.

I guess when you look at that reading on it, what are the risks in your mind to a positive outcome when you think of the translation from the prior trial to the study?

The fact that the study is fully enrolled and is now -- the last sets of patients are coming in for their final visits really over the summer, that greatly reduces risks. Obviously, you're going to get to the readout. You're going to get to the endpoint. We're hitting the cause of the disease, SOD1. Honestly, Salveen, I'd say the risk is risk associated with any time you're developing a drug for the first time in its disease area, right? We're leading the way, pioneering the way for ALS. And there has not ever been a disease-modifying drug approved for ALS. So can we do it? Can we make for the first time, the ALS Functional Rating Scale? Can we validate it? That's the key, right? It's never been done before. Certainly, the Phase I/II study we did, which we use that same endpoint gives us confidence, but we have to prove it. It's one of the risks of trying to be the first one in a new area, a new market is that you're first, and you have to validate the approach. I would say that's the risk, but the Phase I/II data gives us confidence.

Perfect. And then with tominersen and the setback in Huntington's disease here, is there any read-through from that to SOD1-ALS or to the neurological vertical more broadly. I'm just wondering if there's been kind of a reassessment of the vertical?

Yes. We see nor do our partners see read through broadly to the Ionis oligonucleotide neuro platform. These are very different diseases, Huntington's disease, ALS, Alzheimer's, Parkinson's, synucleinopathies, everything we're working in the platform. These diseases have different causes. Mechanistically, they affect different regions of the brain. Some of these diseases targeting different regions of the brain is more relevant than others, other diseases. So whether you're targeting the -- the brainstem, the cortex, the deeper structures of the brain and so on, so they're all different. The fact that the setback was not due to safety findings, also adds to the conclusion that it's not a read-through to the platform. Huntington's is a complex disease. And Roche and with us, we're plowing through all the data now. It's a rich, rich data set, the largest Huntington's trial ever done. And we're going to learn a lot from that study and identifying next steps for our Huntington effort by the end of the year. That's the goal. And that could involve an allele selective approach or some other approach will -- to be determined. We still need to get through all the data. But we are confident and instead, we've learned a lot in this study. And it's going to help us in Huntington's in the future. The other thing to keep in mind for the -- for any questions or concerns about readthrough is today, we have 8 clinical programs in CNS and neuro. They're all progressing very nicely, and we're expecting to have more by the end of the year. I mentioned the Angelman's study in the second half of the year and more coming next year as well. So I don't -- we don't see any read-through from that. It is a complex disease, it's a setback, but we're working through it.

Perfect. And then back to ALS, could you just walk us through your approach for the 3 other programs in ALS and where they stand?

Yes, absolutely. Very excited about our ALS franchise. We have 4 drugs now in development for ALS, 3 right behind coming quickly behind tofersen, We already covered SOD1-ALS. SOD1 is the second most common genetic cause of ALS. We're targeting the 3 most common genetic forms of ALS. The most common form is -- genetic form of ALS is C9ORF -- mutations in the gene called C9ORF. That study is the same approach. We're targeting C9. We're knocking down the production of the cause of C9 related to ALS. That's in a phase, a similar study to the tofersen Phase I/II study. It's longer, it's a 6-month Phase I/II instead of a 3-month Phase I/II that we did for tofersen, and that's projected to read out in the first half of next year. We also have a wholly owned ALS program that's in Phase III, which is targeting the third most common genetic cause of ALS due to mutations in a gene called FUS. This is a rapidly progressing form of ALS. And we got some experience previously in the clinic with our drug, for FUS-ALS, of the compassionate use study by Dr. Shneider at Columbia University, who approached us, asking us to support his goal of bringing this -- bringing a drug to target FUS-ALS to patients and we supported. He got some anecdotal, but interesting data in patients that supported our decision to move to pivotal. So that study is just starting. It's just enrolling, but it's in FUS-ALS. So that's genetic, the causes of ALS. And then there's the broad ALS. The ALS that's caused by -- at which there's no known genetic linkages that are identified. That's our fourth ALS drug. That's with Biogen, and that's targeting a -- going after a target called ataxin 2, which is a key regulator of these granules that cause neurotoxicity called TDP43 granules. These graduals cause destruction of allele cells and neuronal cells, very nice preclinical data. That study is in Phase II development with Biogen. So 4 drugs for ALS, 2 Phase III, 1 Phase III due to read out this year. And then the other ones are chugging along.

Perfect. And if you do see success in the SOD1 program, what does that mean for the other 3 ALS programs? Like how much of derisking kind of flows through?

I think it has an important derisking effect -- impact. Like I said earlier, this is a devastating terrible disease in which there have not been meaningful breakthroughs in -- for drugs for -- that have proven that you can you can redirect the progression of this disease in a meaningful way, really disease-modifying agents. Tofersen would lend tremendous confidence that the other ones have a higher probability for success. ALS has multiple causes, as I mentioned earlier, but the regions of the brain are largely similar. So if you can show that you can target those regions of the brain in a meaningful way and turn around the course of the disease for 1 form of ALS. I mean it certainly can increase your confidence that you can do it for the others as well. Coupled with the fact that, at least for the genetic causes, we know that we're targeting the root cause of the disease. And for the broad ALS, TDP43, actually, the inclusion -- the protein that causes granular inclusions causing neurotoxicity is the -- is well documented as the cause of nongenetic ALS as well. And ataxin 2 has been shown, in various ways, to prevent the formation of those aggregates. So we're even targeting the root cause even in broad ALS, even though, it's not genetic. So I think it lends a lot of confidence that we can target all forms of ALS in the future with a positive tofersen readout.

Maybe just moving more broadly to the neurology vertical. You are going to have a tau ASO update at AAIC. Maybe help us understand what you're going to present in terms of patient numbers and doses and follow up time. And just clinical readouts, I guess, beyond tau in the CSF.

So we are very excited about our MAPT program as is Biogen. The beta amyloid story is controversial and got more controversial yesterday. The relationship between tau inclusions, formations, aggregates is even strong -- is far stronger, in our view. With the progression of Alzheimer's disease from mild to severe. We think tau is the most relevant, most important target for Alzheimer's as does Biogen and our consultants as well. The data at the Alzheimer's meeting in July will really just be a first in-patient study, Phase IIa study. It will be -- it will have a mAD portion, so dose escalation. And of course, the sAD portion, we'll be looking at safety, tolerability, and very importantly, target engagement that we can lower tau levels in the CSF. And we'll also present how that translates to the data we've generated preclinically to tau reductions in the CNS. What's the relationship between CSF and CNS? We've already said, although we have not provided -- been quantitative, but we've stated publicly that the reductions we've seen in tau have been substantial. And not only substantially, they've been durable. With every 3-month treatment, highly durable, that probably supports the potential for less intrathecal dosing in 3 months. I mean, it's really has a long-lasting effect on tau reductions. So you'll see the quantitation of that data. You'll possibly get a look into the long-term extension study as well. That's ongoing. And the patient numbers, I don't have on my fingertips, but these are probably in the 50 to 60 patient range area that's -- since it's a Phase I/II study.

Got it. And then you've initiated a Phase III trial in Alexander's disease. What is the clinical bar that you're looking to achieve there? And maybe give us the status of your programs in Lafora and Prion disease as well.

Sure. These are 3 -- we have a really growing pipeline of wholly owned neurology drugs. Only 2 have reached -- or 2-or-so have reached the clinic to date, but there's a lot more coming -- yes, 2 have reached today with FUS in Alexander's on the wholly owned pipeline. The Alexander program. This is a leukodystrophy. So it's a terrible, typically lethal neurodegenerative disease that most commonly results in death in early years in teens. Patients are born normally, but then they need to generate due to destruction of their myelin sheaths. They lose the ability to walk and function and talk. The cause of Alexander's disease is due to a toxic gain of function in a protein called GFAP. That's what we're targeting. So another example of targeting the root cause disease. GFAP, we've shown preclinically that we can halt the progression of disease by lowering GFAP in models of Alexander's disease. The study that we initiated this year is, we call it pivotal. We don't call it Phase III yet because it's a Phase II/III study. The Phase II portion of the study in Alexander's patients is to select the dose. So dose escalation, looking at GFAP reductions and tolerability. And then that will transition seamlessly into Phase III. And then -- and then we're up and running. The Phase III study is treatments about a year. I think it's 16 months of treatment. And the agreed to with regulators primary endpoint is rate of distance achieved in a 10-minute walk test. There's also many secondary endpoints as well, of course. So that's the study. It's a wholly owned program like FUS-ALS and we hope to move into Phase III development probably early next year.

Perfect. When you look at...

Okay. Then you asked about Lafora and Prion, so very quickly. So Lafora is another wholly owned program. It's a severe epilepsy. Again, a lethal neurological disease that is caused by glycogen accumulation in the CNS. We're targeting Glycogen synthase, blocking glycogen production. That drug is in preclinical development. We hope to get the Phase II study up and running. And it potentially will be like Alexander's at Phase II/III sort of study started next year. And then the Prion drug, we're targeting prion protein. Lethal disease, and we have 2 studies planned for that to proof of concept, both in patients that are presymptomatic and have mutations in the Prion gene. To show that we can prevent disease onset or at least slow it. And then also in symptomatic patients with Prion disease. So those studies will start in next year. We're really optimizing the drug for Prion disease right now.

So when you look across your portfolio outside of the neurology vertical, what are you -- or even in that -- I mean, what are you most excited about in the pipeline?

There's a lot to be excited about. I would say I would have to gravitate towards the cardiovascular pipeline. Because all of our cardiovascular drugs today are using the LICA technology that I referred to earlier. With more than 3,000 patients on LICA -- that have been exposed to LICA drugs and long, long periods of time. And what's exciting about it is that those LICA drugs have been so well tolerated in almost all those indications for cardiovascular were hitting the root cause of the disease, like we are in neurology and for large indications as well as for rare indications. And it's really exciting, well floats to the top in the cardiovascular pipeline that gets me excited are drugs like pelacarsen, which is a treatment to lower an independent cardiovascular risk factor, called glycoprotein Lp(a). Lp(a)causes heart attacks, strokes, more to cardiovascular related mortality due to high levels of -- it's produced. When it's produced abnormally high, you're at risk for cardiovascular disease. We showed in Phase II, we can normalize Lp(a)in patients with cardiovascular disease due to Lp(a)in virtually 100% of the patients, 98% to be precise. Based on that, Novartis initiated a cardiovascular outcome trial that's well on its way to enrolling 8,000 patients-or-so. And again, this is a market opportunity that is estimated to have a prevalence of more than 8 million people around the globe. That's pretty exciting. That definitely gets me Jazzed as does our vupanorsen in LICA with Pfizer, targeting angiopoietin-like 3 which is rapid Phase IIb in patients with cardiovascular disease and mixed dyslipidemia. You asked -- I think we touched on PCSK9 earlier, very exciting LICA for cardiovascular. And then the 2 Ionis wholly owned programs, TTR LICA, which is now in 2 Phase III studies, polyneuropathy and cardiomyopathy. And then the APOC3 LICA drug, which is in a rare population in Phase III FCS. And as I mentioned earlier, we plan to start Phase III study in severe hypertriglyceridemia with that LICA drug in the second half of this year. So I think the cardiovascular -- our 2 main franchises are cardiometabolic and neurology. Cardiometabolic is further ahead because we started it earlier. Neurology is coming up fast and growing rapidly, but our cardiovascular pipeline that I have excites me quite a bit because I do believe it's 1 of the leading cardiovascular pipelines anywhere in the industry.

If you look at the companies that are focused on liver knockdown yourselves and I guess Novartis through Alnylam and with the asset in cardiovascular and then also our cardiometabolic and then also Arrowhead, all of your own portfolios that are -- where we're seeing really nice efficacy, right, through knockdown. So the question is really going to be -- and I guess this question I'm going to pose to you is how are you going to -- each going to kind of carve out your world or be used in combination in this big cardiometabolic market because there's quite a few assets that are recommending in this space?

Honestly, Salveen, when it comes to going after liver targets in the cardiovascular or any space, I really think the profiles of the different platforms are far more similar than they are different. And I don't think the difference is, at the end of the day will matter much. So what matters is how you do drug development? Who's ahead? Who gets there first and carves out in the market, especially if you're pioneering a brand-new market like Lp(a ) right? We're years ahead. And of followers for that for APOC3, we're way ahead. Others were neck and neck like in TTR. Others were way ahead like a Factor XI, for example. So I think it's really important to move to get to the market and to be first. But these are also very large markets, right? These are also very large market opportunities when we talk about drugs like severe -- that treat severe hypertriglycerides or Lp(a)driven cardiovascular diseases or TTR cardiomyopathy and so forth and so on. So I think you -- the way to think about this is the way pharma has done it for decades is that you get there first and then people follow. So you got to get there. What we're comforted by is the fact that outside of cardiovascular, we're building a leading position in, for example, neurology, our second leading focus. So we have -- we're very well balanced in this space with the 2 leading franchises, not just one.

Perfect. And maybe a final question, if I can, and I know we didn't get to too much of the earlier stage pipeline, but you've got a program in acromegaly, as you noted, and we're going to see data in the second half. How do you think -- or how is the drug differentiated versus SSAs, either from a mechanistic or target population perspective? And I guess, what is the bar you're looking to achieve here?

The -- yes. So our acromegaly program, we're planning to provide results from our Phase IIa study in the second half of this year. This is a study in patients with acromegaly who are on somatostatin analogs, but are not well controlled. That is despite being on first-line therapy, their IGF-1 levels are out of the normal range. It's elevated, above normal, and they don't feel well. Our drug, which targets the receptor, for the hormone that causes acromegaly growth hormone -- drug growth hormone receptor is due to bring patients down and normalize their IGF-1 levels that are on top of somatostatin analogs already. So that's our goal is to get patients that are poorly treated. And our focus will be control of IGF-1. That's the -- that's an approvable biomarker for acromegaly. In addition, we've initiated a frontline study that's starting to enroll now in -- as monotherapy for acromegaly with this drug. And that's just getting started, and hopefully, we'll have the data from that next year.

Great. Well, with that, Brett, thank you so much. Really appreciate the time today.

Thank you, Salveen. It's a pleasure.