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

Hi, everyone. I'm Gary Nachman, the biopharma analyst at BMO, and we're very excited to have Eric Swayze, Head of Research at Ionis with us. Ionis is a great platform in antisense technology with a very robust portfolio in neurology and cardiovascular disease and has been a major player in rare disease for a long time. So really great to have you here, Eric, to chat with us. Thanks for being here.

Great. I'm happy to be here and join you, Gary. Thanks for the opportunity to chat.

Okay. Great. So maybe you can start by just giving a brief overview of the company's antisense technology and just the flexibility that you have to modulate all different types of RNA. So how broad that technology could take you and has it taken you with your pipeline?

Yes. Sure. So we've been at this a while and have worked really hard to develop a whole set of what we feel are best-in-class chemicals that allow us to target RNA. And we've always tried to think about all different ways we can modulate RNA by binding an antisense oligonucleotide to the RNA. And so I think one of the things that does differentiate us a bit is that we can change the processing of RNA as much as SPINRAZA does to create a protein that is deficient in a disease. We can also downregulate RNAs. And so if you have an RNA that leads to the expression of an aberrant protein, for example, we can turn that down. And our technology is particularly good at targeting all forms of RNA. Whether it's nuclear RNA or an mRNA, we can modulate the function of pretty much any RNA in the cell, we think. And that gives us a lot of versatility to -- on how the drugs are used and that we can change the function of the RNA in the direction that we want to change it to have a beneficial effect in the disease. So hopefully, that gives us some versatility in the space that some of our competitors don't have.

Okay. That's great. And maybe also explain the LICA technology and how that increases the potency of your drug so dramatically. And looking at some life cycle opportunities with that. Maybe just comment on that.

Yes. So I mean it's no secret in the industry that one of the challenges with genetic medicines and oligonucleotide drugs such as ours is getting them to the right place in the human body. It's been hard. They're not small molecules. They don't [ directly ] diffuse across membranes and access tissues. So it takes a little bit of work. The class of chemicals that we've used has always been able to elicit some function in animals and humans, but we get fairly heterogeneous distribution to tissues and have always thought, gee, if we could just control the distribution better, we could really change the scope of the platform. And that's where what we call LICA technology comes in. It stands for ligand-conjugated antisense. I probably created that acronym. And the idea is that we put something on the oligo that directs it where we want it to go in the human body. And the one that we have most advanced is targeting to liver. And this uses a receptor system on the surface of hepatocytes in the liver and really drives the [ bulk ] of the drug to distribute to the liver. And what that does is increase the potency tremendously because most of the dose that you administer goes to the target tissue and the target cell type. And it's been about a 30-fold improvement in potency for us in human beings because we have older medicines that we've used that didn't have a technology we add to it. And that has a huge transformative impact on patient convenience and the product profile and that we can now give low-volume, monthly subcutaneous injectable because the half-life of the drug is long, this decrease of side effects and is much better in terms of patient convenience, such that we can give it in a low-volume auto-injector that people cannot use at home. So it's really been transformative for the technology with our liver-targeted drugs. We're expanding our LICA technology every place we can think of to enable better drug delivery to organs that we really had trouble accessing before like the muscle, where there's lots of good therapeutic opportunities. We have one that we've published on for delivering drugs to the pancreas, the beta cells in the pancreas that we're working hard to bring forward. And we're looking at all tissues throughout the body to try and develop tissue targeting strategies, much like we've done for the liver. So I think it's one of the next frontiers in this field is really effective LICAs that distribute the drug where we want them to go effectively.

Okay. So are there other therapeutic areas outside of neurology, cardiometabolic-type conditions that would lend itself to the LICA technology and -- as well as your RNA technology, the anti-sense? Or are those the main areas that you're going to be focusing on, you think, for the foreseeable future?

Well, we've had a lot of success in those areas and have thought about building in those areas where we have lots of drugs, and we see lots of good therapeutic opportunities for expanding our own commercial pipeline efforts for Ionis on drugs. We've always been opportunistic, however, with the technology. And if we find a great opportunity outside of a core therapeutic area in a tissue where the drug goes, for example, the liver, we're happy to take it. I guess, an example of that would be our PKK program for hereditary angioedema where we just had some pretty -- we think, pretty spectacular top line data on a drug targeting prekallikrein, which would not really be a cardiometabolic or a neurology drug. It's -- it fits in the allergy-type space, where patients who have these angioedema attacks, there's some -- they have some drugs and some opportunities, but this one really worked well, the second great drug. And we thought it was an intriguing commercial opportunity with a potentially best-in-class drug. So we're always looking to be opportunistic and find areas where the technology works great then we can pursue. And truthfully, that's how we got into neurology in the first place. We thought, oh, gee, maybe we could deliver these drugs locally to the brain and they might work, and it turned out that they worked pretty well and led to SPINRAZA.

Okay. So on that, maybe just talk about how SPINRAZA compares clinically to the competing products, Evrysdi and Zolgensma? And Biogen recently had some DEVOTE data that evaluated the higher doses of SPINRAZA. So how that compares to the current dosing regimen? And is that going to help differentiate the product further in the market?

Yes. I mean we hope so. I mean so just to back up a little bit, I mean SPINRAZA was the first transformative therapy for SMA. It certainly is still the market leader with 11,000 patients on drug and really a robust body of evidence in SMA patients of all ages that the drug works and helps them have better lives and more normal lives. Like our competition, we started in infants, which is the most severe need. But if you look at the body of data in SPINRAZA, there's lots of really quite compelling data that it works well in older patients. There's some case reports where there's 50- or 60-year-old people who have SMA who are responding to SPINRAZA and getting clinical benefit. And we and Biogen think that the efficacy of SPINRAZA really will ultimately be a differentiator from some of the competition in the marketplace. And that what will be most important to SMA patients is best-in-class efficacy. It's a debilitating disease, it can be a fatal disease, and you want the drug that works the best. So everyone -- people are well aware of the competition, Zolgensma's gene therapy has been utilized in just very, very young patients And Evrysdi is an oral, but is dose-capped. And so as the patients get larger and bigger, it's logical to think that perhaps the dose might not be optimal and that SPINRAZA could have better efficacy. And that's what Biogen is doing with these trials that you mentioned, DEVOTE and RESPOND, is trying to position the drug for continued success by further enhancing on that efficacy. That will be the DEVOTE study. We're looking at higher doses of SPINRAZA. It's been an exceptionally safe drug. And thought as we can get the dose a little higher, you can get some further increased efficacy and maybe spread out the dosing interval. That would be good for patients, and give them -- and good for the drug. The other trial is the RESPOND study where Biogen is responding to anecdotal evidence that patients who had the gene therapy were going on to SPINRAZA. We wanted to run a clinical experiment to ask the question in a controlled setting what happens? And is there a benefit of SPINRAZA on top of gene therapy. Great experiment -- great science experiment since it makes good sense that SPINRAZA and the gene therapy medicine would have a positive benefit, if combined, because each provides SMA and they provide -- they should have on top of each other well. So I think it's a great experiment and would further demonstrate the value of SPINRAZA in the marketplace. And the last thing I would say is that with Biogen, we've been working on a follow-on for SPINRAZA for years and have made great progress. And the objective there is to maintain or even improve upon the efficacy of the high-dose SPINRAZA and extend out the dosing interval. So we could have something like a yearly [indiscernible]. So I think there's a good future for antisense and SMA. And Biogen is working hard along with us to defend the franchise.

Okay. Great. And I just want to remind everyone, if you have a question, please put it in the app, and I'll be happy to ask Eric. So I guess maybe going into the cardiovascular disease, maybe highlight your efforts to expand your reach in ATTR and FCS with the next-gen LICAs. So the eplontersen APOCIII-LRx. So how they're differentiated? Maybe just talk about those respective programs and how that's going to follow on from the products that you currently have in the market?

Yes. So I really think those products are the key to the future of Ionis in those spaces. We'll start with the TTR drug eplontersen, which finally got a name. I like the name is better. And this is the follow-on product for TEGSEDI, so identical sequence, very similar molecule, uses the LICA technology, and it really highlights the difference that the LICA made. So TEGSEDI is a 300-milligram a week product, 300 milligrams per week, whereas the eplontersen is being dosed to 45 milligrams a month. And it just highlights the improvement in potency that we've seen with the LICA technology for the active species is a very similar drug, and it just uses the LICA. And the difference there, as I mentioned earlier, is tremendous reduction in dose, reduction in dose frequency and volume much more convenient to take. We can put this in an auto-injector and reduce side effects because many of our side effects are -- like the side effects of all drugs are dose responses. And if you get the dose down, they go away. And so we have what we think are exceptionally well-tolerated medicines that will -- we hope, will have better efficacy than TEGSEDI, and that's supported by our earlier Phase I and Phase II data where the LICA product performed great in terms of reducing TTR. And magnitude of TTR reduction is highly correlated with efficacy in terms of outcomes. That drug is currently in 2 Phase III trials. One is for the hereditary polyneuropathy. We have a readout on that hopefully next year [indiscernible] from 2023. And then we also have a cardiomyopathy trial ongoing in a much larger patient indication where there's probably over several hundred thousand patients worldwide that have cardiomyopathy driven by TTR. And that's the -- standard of care is currently tafamidis. And so our Phase III trial has our drug on top of tafamidis or alone to try and look at it in the real world. And I just look at my notes, I did get the years right. We're hoping to have data for the polyneuropathy trial next year.

Okay. Excellent. Let's shift over to ALS, and maybe we're expecting the tofersen VALOR pivotal Phase III data in SOD1-ALS. That's going to be in the fall. Just remind us what the Phase I/II data showed? What your expectations are for the Phase III in order to support approval, I guess. Is it going to be just for that subset population? And then also, you have the ATLAS Phase III study, right, in presymptomatic SOD1-ALS patients. So how important is that to the overall program and timing of approval and launch?

Sure. So tofersen is a drug that targets SOD1, which is a pathogenic driver of a familial form of ALS driven by misfolded SOD1. And so what our drug is doing is reducing the expression of SOD1 protein and therefore, reducing the pathological aggregates in the dysfunction. In the Phase I/II trial, we did an employ a strategy where we enriched the trial in patients that had very fast progressing forms of ALS. And this data has been published in the New England Journal of Medicine, where we saw quite surprisingly to us and gratifyingly a near stopping of progression of these very fast-progressing patients who have the most aggressive, worse forms of ALS or SOD1-driven ALS. And if you look at the ALSFRS rating scale, which is the rating scale we're using -- rating scale for ALS function and the same primary endpoint of the Phase III trial, we basically saw a stopping of progression. It was flat. So they didn't progress in their disease. This was -- this corresponded to reductions in SOD1 in the CSF and reductions in neurofilament light chain. And so everything is pointing in the right direction. That was very encouraging to us and Biogen because we now had real-world clinical data that said this drug is improving the functional rating scale that we're going to use in ALS for the outcomes trial. And so they launched into the VALOR study, which is a Phase III outcome trial. That study is piloted, is scheduled to readout later this year. It's 100 patients, placebo-controlled, obviously, trial for SOD1-driven ALS, and they've done a very nice strategy, I think, with Biogen doing the -- taking all forms of SOD1-driven ALS, but looking at -- and obviously having some of the fast-progressing mutation carriers in each arm of the trial. And the objective there is to get a label for all SOD1-ALS. These patients have nothing. There's no therapy for them that is remotely close to disease-modifying. And here, we're right on genetic mechanism for a genetically driven disease with very, very encouraging data in the Phase I/II and great preclinical data. So my expectations and hopes are pretty high for that program. Drug development is always -- always throws you some curveballs, but my expectations are pretty high that -- and what we want is for the Phase I/II data to [indiscernible]. And you have larger numbers of patients, and we'll -- we can see a slowing of progression of very brutal form of ALS. And that's what we're hoping for. As you mentioned to ATLAS, the ATLAS study is to look at presymptomatic patients since a lot of these patients, they run families and they start to know their status. With all of these neurodegenerative diseases, many -- most, treating earlier is always on the table, right? It makes good sense if you're building up pathogenic protein over a lifetime and you know you're having it, let's lower it earlier. And in every space from Alzheimer's to Huntington's to ALS, people are thinking about treating earlier and that's what the ATLAS study is. It says, well, if you know you have a gene and we lower the expression of SOD1 before you develop symptoms, do you ever develop symptoms. I don't think it's important for the launch of this drug. I think it's important for ALS patients in general and kind of advancing the body of science and understanding if we treat early, does it help. And much like we did for SMA, if you treat presymptomatically the SMA patients, the SMA gene carriers who didn't really ever get SMA, which was fantastic, right? And so the question is, can we actually prevent the terrible ALS disease in patients who are known gene carriers? That would be terrific outcome. But it doesn't really affect the trial and conduct of the VALOR study and affect our thinking about what we're constituting a success there.

Okay. And with the recent tominersen setback in Huntington's, I just want to clarify, is there any potential read through to SOD1-ALS, or more broadly, across other neuro disorders?

We get asked that a lot, and I really don't think so. We -- I think it's a Huntington's disease issue. I mean there's a lot of differences between Huntington's disease and other neurodegenerative diseases, especially in ALS. And we don't think there's any read through. The Huntington's drug was safe. We know it lowers its target. And what we know now that Roche has talked about is lowering its target didn't make a disease benefit. So from a pharmacodynamic standpoint, the drug did what it was supposed to do. It lowered mutant Huntington. And then the question is, is lowering mutant Huntington in this patient population for the length of time we did in symptomatic, we talked about pretreatment with the ATLAS study, do you need to treat earlier in Huntington's? Do you need to only lower the mutant Huntington and not lower total Huntington -- or drug lowers total Huntington? Those are questions that have to be answered. Hopefully, for the HD community, this trial, when Roche gets through analyzing it all, we'll shed some light on what the best path forward for these patients is. Devastating for the patients and their families since they had a lot hope from this drug. But I don't think there's any read through to our neurology programs. As I said, that drug did what it was supposed to do as far as mutant Huntington.

Okay. Can you maybe just explain the arrangement with Biogen, how they can exercise options with all the different assets in the neurology pipeline? Do you have any say as to what ultimately is going to be wholly owned or what you think that they're going to pass on? And then how do you manage your wholly owned asset in ALS? So ION363 for FUS-ALS, with tofersen that's partnered with Biogen. So it just feels like it's overlapping a little bit, so how do you manage those different programs?

Yes. Sure. I'll hit on all of those. Let me back up a little bit and talk about the Biogen relationship. It's been a fantastic strategic relationship we have with Biogen. They've been a good partner. We've done a series of transactions with them. We're up to 6 now, I think, over many years. It started with SPINRAZA and spinal muscular atrophy. And they have steadily invested more and more in Ionis and more and more in Ionis technology, such that with the latest transaction, they currently have an exclusive option to -- option into Ionis-owned drugs. They have to -- look, just like you buy a stock option, they have to maintain those options by paying milestones along the way. And so I actually think it's a very nice structure. Biogen can ask us to work on targets that they have of interest. We can work on whatever we want. And we do. We have a very active and fantastic neurology drug discovery team. We work on lots of different programs across the whole space of neurological disease and whether Biogen assets too or not. And when we reach drugs to various points in research and development, Biogen has the opportunity to opt in or not. Our teams are more productive and will produce more compounds that make sense for Biogen. And that was the design of the deal originally. We never expected Biogen to take everything. Some things don't fit with their strategic vision, their strategic alignment and where they want to go with their commercial pipeline. Some things fit very well with ours. Some things are a little too rare for Biogen, they wouldn't move their needle, so to speak, they'll be fantastic products for Ionis. And so I think it's been a great relationship and things naturally go where they best fit. Some of the big Alzheimer's drugs like MAPT, for example. We have some data coming out on a drug that reduces tau for Alzheimer's disease. Biogen opted into that early on in the development of that drug, and it fits to have Biogen developing Alzheimer's disease drug, right? Whereas some of the other rare indications, Alexander disease is one that we're developing for our wholly owned pipeline. We just got started. Fantastic preclinical data. A really compelling biological hypothesis. Patients who have no good treatment and are in great medical need, that was a little rare for Biogen. And so that's perfect for Ionis. FUS-ALS probably fits in that bin. As you know, Biogen and Ionis have jointly invested in very broad ALS relationship. We have the tofersen program for SOD1-ALS. We have a C9 ALS program. We have an ataxin 2 program for sporadic ALS with Biogen. FUS-ALS was a little bit rare. It's a different genetic cause. It's about 25% of the patients of SOD1-driven ALS. So there really isn't much overlap other than that they have ALS. They just have a different pathogenic protein that's driving it. Our FUS drug lowers the pathogenic protein FUS. And preclinically, it does similar things as to lowering SOD1. And so we think it's a great opportunity in the ALS space and want to bring this medicine forward to patients. So I don't think there's much conflict there with Biogen at all. And we work very well together with them on all the neurology programs and have a great relationship.

Okay. Is there anything else in your wholly owned pipeline that you would want to highlight in the last minute or so? You mentioned Alexander. There's Prion, Lafora disease. Pick one that at this stage you're particularly excited about. And what the next data point will be coming out of that?

I mean those are some of the early programs. They are rare disease programs. And so we hope to get them streamlined and move through development fairly quickly, and they're on our list of potential commercial medicines in the '25, '26 time frame. So I mentioned Alexander's disease. I think that's a terrific -- interesting science story, and we think it's a good Ionis commercial opportunity. And we just got the first-in-human started and hope to transition that into a pivotal study soon. And it's got a very compelling rationale where, again, it's a pathogenic protein that has dominant mutations that are expressed, and we're lowering the pathogenic protein. So it's a very cool program and happy to have it part of Ionis wholly owned assets.

Okay. And maybe I think we have another 30, 60 seconds. So just your expectations for pelacarsen that's partnered with Novartis. How optimistic are you? There has to be an outcome study, typically challenging when you need outcome studies. Obviously, you have a big pharma company behind it. But where would you rank that in terms of your optimism, I guess?

Well, I think that's, I mean -- I guess, an underappreciated asset. So pelacarsen is a drug that lowers a protein called Lp(a). And that is an independent risk factor for cardiovascular disease from LDL. And it's hugely prevalent. So 15% to 20% of the world's population has high Lp(a), which puts them at risk for cardiovascular disease. And the biology of that is reasonably well understood. Lowering it should make perfect sense to address that cardiovascular disease risk. And that's what Novartis is doing in the pelacarsen Phase III outcome trial. It's about 8,000 patients. So this is an example of the drug that makes perfect sense for us to partner with a big pharma partner and utilize their resources to operationalize a massive Phase III trial, looking at outcomes and then also assuming it's successful, utilize their marketing strength and resources to sell the drug into physicians who would prescribe it to people who really need to become aware that their Lp(a) is a risk factor and then lower it, hopefully, with our drug pelacarsen. And we know the drug lowers Lp(a). And so it becomes a matter of proving that lowering that in a cardiovascular -- in a patient population with cardiovascular disease and high Lp(a) makes a difference. So it's -- I think it's a very exciting program. I think it's probably underappreciated. We should have some data coming out, hopefully, in the 2024 time frame, I think, and look forward to seeing if the hypothesis proves true.

Okay. We're going to end on that note. So Eric, thank you for a great discussion. And that's how we're closing out today's conference. Spotlight on rare disease and ophthalmology, had a lot of really good content, a lot of good panelists today. I want to thank my colleague, Matt Luchini, for also co-moderating and running the show. And that's it. I hope everyone who listened enjoyed, and have a great day, everyone.

Thank you.