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

Awesome. Thank you, Rob, and thanks to Eric Swayze, Executive Vice President of Research at Ionis Pharmaceuticals for joining us in front of a cool brain picture that we were just talking about. Thanks again. It's always fun to do a panel with you.

I think maybe just to set the stage, Eric, you guys hear this from investors all the time, right, there's a ton of pipeline products at Ionis. What are the kind of 2 to 3 things that you feel like are worth highlighting as we kick off that are either topical recently or maybe going to become more important or underappreciated over the next 12 months and then I can get into many of my questions, and we can go from there.

Yes, sure. So well, you know that I'm a research guy, and thanks for having me on. I really appreciate the opportunity to chat. So as a research guy, I always like to think about -- I always like to talk about the technology and how we are always inspired to make it better and improve it. And I know that's a long way out from commercial products because they tend to be new molecules. But we've had a couple of things that I think are kind of exciting that have popped up this year in terms of the potential for new LICAs and some new backbone chemistries. And so since we are a technology company and are always focused on modulating gene expression with our technology, it's worth talking about, I hope we can come back to it. But I think the key thing for us really is we're a more mature biotech and are looking to become a commercial company is looking at our late-stage portfolio of LICA, GalNAc medicines, which we have the opportunity to have multiple Phase III trials ongoing next year. We already have multiple Phase III trials ongoing, and we're intending to add to them and are adding to it. And so it's a pretty exciting portfolio of late-stage medicines. I guess I don't have to go through them all. I'm sure you've got questions about the various programs, and I'll pick up on the ones that I think you've missed. But certainly, the GalNAc technology and our LICA liver technology has transformed the class of medicines that we have that treat the liver and gotten us into the range where, hopefully, they'll turn out to be competitive commercial products.

Yes. Okay. Well, because -- yes, because you're a research guy, maybe we'll just talk about things in a more science-y level and less about TTR commercial dynamics. And maybe to start, right, I mean, I think -- I definitely want to talk about some of your technological improvements for sure. I think one of the questions that has been top of mind from some investors is how to kind of make sense of the Ionis CNS portfolio in the backdrop of this incredible success with SPINRAZA but setbacks with Huntington's and ALS. And I guess when you think about those drugs that didn't end up working, what are the learnings in your mind going forward as you think about the prospects in other diseases like Alzheimer's or Parkinson's?

Yes. So I certainly -- I'll start by saying I certainly believe our technology is still uniquely suited to address neurological diseases of many stripes and there's lots of many different flavors. They're not all neurodegeneration. And everyone says neurology is hard and neurodegenerative disease is hard and maybe SPINRAZA lull some people to sleep, and they didn't think it was easier than it was. It certainly was a stunningly successful drug that transformed the space. One thing that I will say is we know that the drugs knock down their targets as intended and modulated their targets as intended. And I will very confidently say that I'm comfortable with the target engagement we got in both those programs, knowing what we know about preclinical translation. So I think the drugs were doing what they were supposed to be doing, and they didn't have an effect on the disease as we measured it in those clinical trials. So from SMA to Huntington to ALS, they are different diseases. The biology is different across all of those spaces. And I would say that Huntington certainly is far more complex than SMA and ALS. And ALS is probably more complex than SMA, where you're trying to replace a missing protein in a very young patient. It's a much more plastic system. Certainly, I'd say one of the key lessons is treat earlier, treat longer. And that's been consistent across other people's drugs, not just ours. And we have to debate our -- we've got a clinician who's a favorite of mine who every program talks about when we're going to get to treating presymptomatic patients. And it's like, well, yes, of course, we should treat presymptomatic patients once you establish that the drug works. And so it's a bit of a chicken and egg problem.

Yes. Yes, fair enough. And I think the age component and the plasticity of the system are -- I mean they're -- it's hard to say that, that couldn't be some big part of this, right?

I'll ask you a question because you're a neurofilament buff. And if you -- if we didn't have this conversation, we said we were lower neurofilament as much as we did in the tofersen trial. What [indiscernible] the effect on ALSFRS would have been?

I mean yes, I know it's amazing, right? And that one specifically, it makes me wonder if -- like I understand the argument to do a shorter study because SOD1 patients progress pretty rapidly, but it makes me wonder what an 18-month placebo-controlled trial would have looked like, right? Don't you think?

Well, we're going to have a longer placebo uncontrolled trial now, right, because the early access program is open and people are on the drug, so it will be placebo-controlled. And you can argue that it's kind of unethical to do a placebo-controlled trial in a patient population where those people are going to die. So -- and I think the patient community would be pretty unhappy with that. So I understand the trial design, I think it made sense. And it certainly made sense in terms of what we saw with the Phase I data, where I think those patients had 15 points or something decline in ALSFRS. I don't have the numbers right on the top of my head. But if you -- for an internal presentation where I was trying to explain some of to the team, if you just plot the Phase I data on top of the VALOR data, the placebo patients crashed and the fast progressors and they did not. And they went down like 2 points in the trial. So it's unfortunate that ALSFRS didn't behave better. And certainly, if you look at the analysis that Biogen presented about looking at neurofilament levels versus declines, neurofilament was a far better predictor than ALSFRS. So it goes back to, well, maybe neurofilament in motor neuron disease is a good neurodegeneration biomarker. And how can we use it? And how can we think about that in these types of diseases? So I certainly don't think that either of those diseases is untreatable and I think that oligonucleotides can make a difference in that disease space. So -- and then I'd say beyond that, well, there's learnings. So our Biogen C9ORF program, our Biogen ataxin 2 program, our Biogen MAPT program, our Biogen alpha-syn program, they're all in earlier stages. And so we can learn from that, and Biogen learned a lot. And there's certainly getting a lot of press over what they've learned and what they haven't learned. And -- but they're a good clinical organization, and you can think about how to incorporate that stuff in your designs and make better clinical studies. Our own program, FUS-ALS, is already longer trial than the tofersen trial. And we're thinking through how we can use those learnings in that space. I would say that some of our other neuro programs are very different. So the Angelman program that we're going to get started this year with Biogen, it downregulates, in essence, transcript. It turns up UBE3A, which is missing in the disease. And some of our competition that -- because it's clinical trials but have some safety issues showed hints, I'll call them, of pretty impressive and quick clinical improvement. Well, if that's real and we have a molecule that's as good as I think our molecule is, we should be able to see that up fairly quickly. The Alexander's disease program is another one where we're lowering a toxic protein, but it's an astrocyte target and it's a leukodystrophy and it's in younger patients. And so it's not these degenerative states that you're trying to reverse with aggregates. It has the potential to be a much more plastic system, much more [ rapid ].

Yes. Yes. Okay. Well, look, the age argument, I think it's a really, really good one and probably one that people don't cite often enough. I think -- let me ask you about one other sort of explanatory argument and how to extrapolate it. And that is really that I guess it kind of comes down to biodistribution, right, and how high you need to dose. And SMA, named after the spinal cord, might be the easiest CNS disease you pursued from a delivery perspective, whereas others you've got pathology that's all over the CNS. And that, I think, is reflected right in the dose pursuit for Huntington's or the dose pursuit for ALS. Even when you adjust for adult to ped, it's still much, much higher. Is delivery something that you're kind of trying to work on next generations of? Or do you feel like that's elsewhere away?

So we've been having this debate for a long time too. I still based on the preclinical data we have and how would our cortex to spinal cord target reduction ratios are in primates and pigs and dogs. I think that we're getting very good distribution throughout the CNS. And certainly, we're hitting the cortex, the hippocampus. Certainly, we're hitting the motor cortex. And I guess we won't be able to prove to you until we have some autopsy data, which is hard to come by. But the primates have great distribution. And one of the first things we did was say -- well, not even primates, they're little monkeys. They have short spinal cords. And so we went and looked at dogs and pigs that have longer spinal cords than humans and did the same type of dosing experiments and the same results held is that the cortex to spinal cord ratio of target reduction was the same and, in many cases, favored cortex. And I don't think you could also get the target reductions that we've seen in programs like the MAPT program because the cortex is such a large part of the mass of the human brain. And so to see the levels of target suppression that we're getting, we have to be hitting that region, right, in my opinion.

Okay. Yes. Okay. Interesting. So what -- when you look at these -- the next set of CNS programs, what is going to hit not just data next, but like real data that's going to tell us about clinical efficacy beyond just knockdown?

Yes. Well, I can't tell you when we're going to get the clinical data. I wish I had a crystal ball like that.

Which is best suited to show that...

You always look for that data in the early programs. MAPT is a great program but it's a neurodegenerative disease and Alzheimer's disease in older patients. And the data there says that it might take a while to show those effects. I'm super excited about the MAPT program. Biogen is going to go run a Phase IIb on there, and we'll see how long it takes them to get through that. The Angelman program is intriguing. We talked about that one. Perhaps we can get a quicker read on some clinical data. And I'm optimistic about programs such as the Alexander's disease program, which, again, is a different one that we've talked about.

What's the timing for Angelman's?

That one's starting first in human later this year.

Okay. Okay. Okay. Great. And then for C9ORF, we'll have some data for that first half next year, right?

First in human, so it's a safety target engagement. Safety is the primary, obviously.

Yes. Right. Okay. Now there's a [ beta ] out there in the field, right, around the knockdown approach. And do you need to knock down and replace the protein? Where do you sort of stand on making sense of that biology risk?

Yes. I think -- I don't think you want to knock down all C9. So we don't do that. Some of our competition in the space makes a big deal of that, but they neglect to say that our drug is -- targets only the expanded repeat. So we only knock down the pathogenic protein, the pathogen transcript, right?

Is that right, you don't knock down wild type?

We don't knock down total C9, right? So there's 2 alleles. One has the expanded repeat in it and there's an RNA processing event that makes this transcript. We target the transcript that only has the expanded repeat in it and leave the rest of the transcript.

Do that, given that these expanded repeats can be all of...

There's other sequences. So we target a sequence that's adjacent to the expanded repeat that's in that transcript. So we were first in the space. We have -- we've pretty aggressively screened and patented all of the best sequences that are in that expanded transcript. And then other programs, I know they've done some gymnastics where they're targeting technically the total transcript, put in a region that they say gives them leverage over the expanded repeat transcript. So I think the point is our drug only reduces the pathogenic transcript and we spare the nonpathogenic C9 or 72 protein, which I think is the right strategy. The preclinical data is reasonably compelling that, that transcript of the expanded repeat is pathogenic. There's toxic -- peptides that are made from that repeat that we clearly looked preclinically and we'll look forward clinically. And there's [indiscernible] form from aggregates of that transcript. So I think it's pretty clear you don't want that thing around.

Yes. Yes. Yes. Okay. Okay. Very good. And then for MAPT, how do you kind of get confident with knocking down all forms of tau, right? I think if I -- and look, there's -- it's always so hard to totally know the evolutionary role of a protein that might have multiple functions. But I think tau is an important side of skeletal protein. I don't know, you correct me if I'm wrong, but I think the knockout might be embryonically lethal. How do you think about...

The knockouts are -- we call the knockouts completely fine.

They're not [ team rockets ].

They're not lethal. They -- someone has published a minor pole climbing deficit 2 years of age or something in...

There's no controversy about that, the knockout and the phenotype of it?

The knockouts are fine. You can knock out MAPT. There's other microtubule binding proteins, right? There's lots of microtubular stabilization proteins if you're concerned about that role. It has a scary sounding name that you should take out. And even if you look in the human genetic variation databases where you can look for tolerance or loss of function, it's pretty good, right? But it doesn't look like some of the other proteins we've worked on that. And we've done lots of work on lowering it and looking at the knockouts and haven't seen any ill effects.

Yes. Okay. My mistake.

So I feel quite comfortable with it, and we've had to get some people over the hurdle with the data because they hear some microtubular binding protein and they flip out.

Well, maybe they're naive like me because it sounds scary, but that's a pretty strong argument.

I don't think the data supports it. And the data definitely supports that it's a bad actor in the pathogenicity of Alzheimer's disease.

Yes, yes, yes. Okay. Well, yes, for sure. I mean, look, tau, whether -- correlation is not causation, but it correlates to progression a lot better than A-beta, which also suggests maybe a wider dosing window, too.

And you have to get it inside the cell.

Yes. Yes. No. And we've been on the same page as you guys as it relates to the antibody approach and the risks associated with that for a long time. So okay, very good. So I guess from your perspective, what pipeline program on the development side would you think is worth highlighting next to talk about because I could go any direction?

We can talk about PCSK9 where we just had some data at AHA. And I don't know if you've seen it, but it's pretty impressive lowering of LDL and -- because of the impressive lowering of PCSK9. So this is a multiple dose study in subjects, if you will, with high cholesterols Phase Ib, I guess, that [ AZ ] presented at AHA just this weekend. We got 90% lowering of PCSK9, which is far superior to any other drug out there and up to almost 80% lowering of LDL-C, which again is far superior to our RNAi competition and also the PCSK9 antibodies. So that's an example of a molecule where looks like the efficacy of the -- this is a second gen, gen 25 chemistry. So this is our C8 chemistry with a like -- liver like on it. Is it getting better efficacy than some of our competition? So that was pleasing to see. We saw it in the single dose, and we saw it in the multiple dose. So we're excited about that program. AZ is excited about that program and looking to get it into a proper Phase II -- well, actually it's ongoing and get that data and then set us up for a potential Phase III start next year.

Yes. Yes. No, that is exciting. Now what are you -- what do you think the differentiation profile might look like post Phase III? I guess in a comparable population, how much more LDL lowering can you drive versus inclisiran?

Well, so I think inclisiran was 50% nominal LDL. And they also seem to have a plateau effect. I'm most familiar with their Phase I data where they went up to 600 or 800 milligrams and clearly looked like it was as good as it was going to get.

Yes. What was that by the way? Is PCSK9 like more of an intranuclear target? Or is there something about the cell biology that makes this better for an [indiscernible]?

I don't know. But I will tell you that we -- even though our history with siRNA and RNA interference -- we've been playing around with it for years, and we're investing in very early. We're working hard on single-strand approaches. We routinely screen siRNA for all our targets. Some are susceptible and work well. Some -- the antisense, all of it work better. And perhaps PCSK9 is one of them. It was gratifying to see the human data. If you ask me before I saw our data, I would say, well, PCSK9 looks it's a hard target to knock all the way down. But this molecule behaves very nicely. Maybe you can go back and look at TTR, and I'm sure you want to ask me some TTR questions there. Vutrisiran and eplontersen look very comparable in their efficacy profiles. They do the same thing and the efficacy is the same. So each target can be a little different. And as for why PCSK9, well, I don't know the answer to that one.

Yes. Yes. Okay. No, look, it's interesting. As it relates to TTR, I think the main question that you probably get over and over from investors is, all else equal, why take a once-monthly product versus every 3- to every 6-month product, right, especially when the latter might be on...

It's every 3 months. So I believe there's a PK model that says it could be every 6 months, not a clinical trial. So the clinical trial is every 3 months. I'm assuming that's what their label will be.

Yes, I think so, too. I think it seems like there's a decent chance they'll get to every [indiscernible] they have with other RNAis in the same generation, but let's just say every 3, right? I mean if I'm a patient or a doctor and I say, "Why do I want to stick myself more times than less?" Is there a clinical counter case you can make?

I mean, so first off, that the cardiomyopathy market, which is the bigger market, it's a big market. There's going to be -- it's going to be a competitive marketplace, as you well know. There's stabilizers and multiple stabilizers and oral stabilizers and gene reducers. And so -- but we think it's a big enough market for multiple competitors. I also think that reducing the expression of the protein is going to be a superior mechanism of action. And we've been doing market research in this space, and we think we've got a low dose, low volume once-monthly drug in an auto-injector that will be convenient to use for patients at home. And we have the largest trial ongoing, we think, what we know. And the -- we're also doing it on top of the standard of care. And so we hope to generate data that allows us to position the drug successfully and can be in the commercial space.

Yes. Yes. No, fair enough. How do you think about the debate surrounding whether or not that efficacy gap that's been seen in polyneuropathy will translate to cardiomyopathy given that the ladder is maybe a more severe phenotype, right, patients with...

Describe your efficacy gap to me?

Not between you and Alnylam, between [ silencers ] and stabilizers. Do you know what I mean?

Do you think the -- so you're asking, in a circumspect way, whether I think that the reducers are going to work better in cardiomyopathy.

Well, it's like -- you're right, in polyneuropathy, the gap in efficacy is like this big, right? It's massive. And in cardio, right, these patients are -- have more structural damage. There's -- yes, I don't know. I just think it's an interesting question, right? Because I think most people would prefer a pill rather than injection. So I think, clinically, it's got to be better, at least somewhat, right, to be a market leader.

I'm not sure that's true that all. I mean I think some people would prefer a pill. Some others wouldn't and...

Name a market where people choose an injection over a pill when there's no efficacy difference. I can't think of one.

No. I mean...

I don't mean to put you on the spot. I just like -- I can't think of one.

Well, now I'm going to start citing anecdotes because I don't have the data. My mother-in-law loved her injection of her bone drug. I can't member which one it was, he didn't -- she liked taking fosomax. So she likes to go to the doctor every 6 months and get her infusion. I know they exist. And the truth is there's always efficacy differences. And there -- I do think that lowering the protein is likely to be a superior strategy. We don't have -- I mean the clinical trials will prove that. But if you have a pathogenic protein, and of course, I'm biased because of what our drugs generally do, I like taking it out rather than finding some way to stabilize it and keep it there.

Right, right, right. Yes. Yes, totally. And look I'm...

These patients are sick. So they want to get better.

Yes. No, look, I'm an optimist on cardiac, right? I think it's -- I think the silencers have got great potential there. I just think it's an interesting question, right? And I guess we'll kind of need clinical data to show. How do you think about powering a clinical trial that's a big outcomes trial without any preexisting efficacy data in cardiac, right? Like what was kind of the team sort of discussion on why that type of study is still, I guess, ideally powered conservatively?

Yes. So I'm definitely the wrong person to ask about powering assumptions in the Phase III trial. Certainly, we thought about it and are confident that our design is sufficiently powered to show us a benefit and wanted to look with the way we did on the standard of care because we think that's how to use clinically. And so we've got both patients that are naive to treatment that don't have any treatment that are on tafamidis in the trial, and we think it's a great way to look at the drug.

Yes, yes, yes. Okay. All right. Well, in the last 5 minutes, let's talk about some stuff that you're the expert in and the lead on. Does it make sense to talk about HAE or growth hormone? Or would you rather talk about...

I think it makes sense to just reference the HAE program and the volanesorsen program, the APOC III program. And it's 2 other things that are Ionis owned that have some pretty exciting data. So first, I guess we should talk about donidalorsen, which is the PKK drug, which had -- it's another one that you could say have the potential to be best-in-class. We saw a pretty dramatic and rapid reduction in attack rates in that trial. And we have the -- we can see the inter-patient -- the individual patient data was presented at meeting with lots of AUs last week. I can't read the exact name of it, the allergy meeting. And it had a 97% or something reduction in attack rate and -- in the later half and 90% overall. So it looks like it really, really works to prevent attacks, which is what matters to these patients. And we're going to start Phase III to extend that data, hopefully. Then the whole volanesorsen program, our APOCIII inhibitor, clearly, I mean it's kind of the follow-on for WAYLIVRA, clearly should work in FCS. That trial is ongoing with data in 2023, I think. And then we just started the core study, which is for severe high triglycerides, which is a greater than 500 milligrams per deciliter patient population. And if you lower APOCIII, it is the FDA recognized primary end point. So there's a nice exciting program. It's got millions of patients. That's an Ionis drug. So we think that's a good indication for us also.

Yes. What do you envision kind of Ionis looking like 3 or 4 years from now, right? You're going to have a lot of these mid- to late-stage opportunities.

That's a question. Thanks for the setup. So I mean we've been talking about having multiple products on the market by 2025, 2026. We've got all these drugs in Phase III, more than just the ones we've mentioned, there's also things like the pelacarsen program with Novartis for Lp(a), the mipomersen program with Pfizer could be in that time frame, if it's successful. So there's potentially a lot of commercial products with both us and our partners that are on the marketplace. We alluded to technology earlier. We continue to advance the platform, both with base chemical modifications like our new backbone chemistry that I'm excited about bringing forward into new drugs as we advance new drugs to hopefully further improve therapeutic index, and it's more stable than the backbone that we've been using. And if we use it right, it can extend duration. And the other thing is new LICA. So I think that tissue targeting is absolutely crucial and key for this whole industry. We're not alone. We've been in it for a very long time and are trying to identify the best-in-class modes of targeting our drugs to the tissue we want. And for example, that's why we did the collaboration with Bicycle Therapeutics, to get small molecules that look like our GalNAc LICA that will deliver the drug to muscle as opposed to a monoclonal antibody, where the difference would be a dose of 2 to 5 grams of a monoclonal antibody ASO or siRNA versus 200, 300 milligrams of an ASO bicycle should deliver the same amount of drug to the tissue.

Right. Yes. Well, there's a lot we can talk about, right? Okay, I guess as it relates to kind of just -- there's a number of things I would love to ask follow-up on, but we're almost out of time. So as it relates to kind of the chemistry improvements, right, because that's something you brought up from the beginning what -- when do you see that kind of being proved out in the clinic, where you take forward a drug with next-gen chemistry and you're like, "Hey, wow, we can dose every 2 to 3 months and maintain 90% knockdown or something like that? Like when does that kind of come from?

So that's -- I mean, you can do the math, right? So it's -- you saw a primary science paper. We have that in every single drug identification program. So we'll start to have internal candidates in the near future. And then we've got to do the normal drug development routine where you've got to navigate tox program and then you get into humans and get the right indication where you have a good biomarker. And we're starting to think that through. But it's not instant. it Will just take a while.

Yes, for sure, for sure. And if you want me to ask one last question on the Bicycle collaboration because we thought that was super interesting one, right? And muscle is just a space with huge opportunity and is wide open. I guess understand your point around dose and drug weight with a small peptide versus the monoclonal antibodies. I think the interest in the antibody strategy versus a peptide, right, is -- has kind of come down to selectivity, right? And for some conjugated peptides so far, like the PPMO, right, we've seen nice efficacy in muscle but at the cost of kidney tox. So can you talk a little bit about how you're thinking about this technology and...

It's not even the same ballpark, right? So the PPMO, that's a poly -- thing that doesn't specifically target muscle. The Bicycle peptide is specific binder of human transferrin 1, just like the antibodies are. I believe it was presented today, Mike Skinner from Bicycle Therapeutics presented some of the data with both their bicycles and on our oligos at [ Euro ] today. We've got a crystal structure of the compound binding to a specific pocket in transferrin and specifically binds in humans transferrin 1 . We've characterized the binding selectivity for a whole bunch of things. It's specific for transferrin, doesn't affect human transferrin binding, just binds to the receptor. It's just like an antibody or a fab in its behavior. It's just smaller and we think is potentially better.

Yes. Okay. Exciting stuff. Well, thanks, Eric. I know we talk for another hour, but I appreciate you taking the time, as always.

Sure, Paul.

All right. Thanks, everyone, for joining. We'll see you on the next one.