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

Great. Good morning, everyone. My name is Jess Fye. I'm a biotech analyst at JPMorgan, and we're continuing our 40th health care conference this morning with Ionis. I'm joined by the company's CEO, Brett Monia, who is also one of the founding scientists for Ionis. And he's going to give a presentation on the business, followed by a Q&A session. [Operator Instructions] So with that, over to you, Brett.

Thank you, Jess. I appreciate it. Good morning, everybody, and thanks for joining us for today's presentation to provide an update on Ionis. I'm very pleased to provide an update at this year's JPMorgan Healthcare Conference. I understand that the slides could be a little bit out of the sync. So I'll try to remember to report slide number or advance -- that I'm advancing to the next slide. These are my forward-looking statements, which I recommend to everybody to review at your convenience. So moving on to the next slide, Slide 3. At Ionis, we have a very clear vision and we're executing on that vision. It's becoming a very successful leading fully integrated biotechnology company positioned for substantial growth in the near term and in the longer term. We have a very rich mid-stage pipeline and a very rich late-stage pipeline with several drugs advancing rapidly to the market today. Our technology continues to advance and grow as is our leadership position in our technology, and we have a very strong, compelling financial position, allowing us to invest in all aspects of the business that we need to invest in to ensure for substantial growth well into the future. At Ionis today on Slide 4, we have a very strong foundation to build off of. A foundation that we've created over many years in which we have several pillars to build off of. We've validated a new platform and proven a platform that's delivering drugs to the market today. We have a very rich pipeline, as I said, we have a very strong financial position, as I said, and we have the people, the employees who persevere, innovate and live by the vision that I just stated to be successful at Ionis. And leveraging off of that foundation, we have the potential to provide substantial growth. And that growth is expected to come really from 3 strategic objectives that we're working hard against and making great progress in achieving. The first is to become fully integrated. To build out the Ionis commercial pipeline and to deliver drugs to the marketplace ourselves, Ionis commercialization. Second is to continue to invest in our technology and science and extend our leadership position in RNA-targeted therapeutics. And thirdly, and probably most importantly, of course, is to deliver drugs, to deliver an abundance of transformational drugs to the market in the near term and in the long term. And what I'd like to do in this presentation is to focus on these 3 pillars of growth as they'll provide growth for the organization over the next little bit, focusing first on the commercial strategy and the commercial organization. At our Investor Day last month, we went into great debt in providing our strategy, our focus and what our plans are to commercialize drugs of our own at Ionis. And we really highlighted 3 near-term commercial opportunities at that meeting. So today, what I'd like to do is just hit on some of the high points on what our strategy is and the progress we're making in building out and executing on our commercial vision. First, our go-to-market strategy. We have 2 leading franchises in cardiovascular and neurology and these will be the core areas that we'll focus on delivering medicines to the market. But with that, we will also, on occasion, commercialized drugs outside of these core franchises, assets outside of these core franchises that make sense for us to commercialize. Drugs that have a high probability of clinical success and market success, attractive markets, drugs that we feel we can manage. We're going to commercialize drugs of our own for both rare indications as well as large indications. We're going to focus our commercialization activities in the United States market to begin with. But we'll create distributorship partnerships and other types of partnerships to make sure our drugs are available and are reaching patients around the globe. We'll grow over time, but we'll do so in a responsible, disciplined manner. We will expand our commercial pipeline beyond the 3 near-term assets that I referred to a moment ago. We will grow outside the United States over time and build our infrastructure outside the United States. And we'll continue to partner as it makes sense to do so, assets that don't fit within our core areas or our focus areas or our capabilities, what we can manage, will out-license them at the right time to bring in the greatest amount of value to the company as we can. And there will be some co-commercialization partnerships that will establish over time as well as we did with AstraZeneca that we reported last month for eplontersen. Moving on to Slide 7 now. We are well on our way in building out a commercial organization of excellence in executing on our commercial strategy. In January of 2020, when I moved into the CEO role, I announced at the JPMorgan Healthcare Conference actually. My decision and my vision to actually move Ionis to full integration. And we've made great progress over the last 2 years in executing on that vision. We -- that same year in 2020, we merged with Akcea, our commercial subsidiary, and that was very important because it brought in outstanding commercial talent into the organization, into Ionis accelerating our growth, and it also brought in drugs, assets that we created that we believe in drugs like olezarsen and eplontersen. In addition, later that year in the following year last -- in 2021, we established 2 very important partnerships with Sobi. Those partnerships were important because they -- Sobi in this distribution agreement continues to provide WAYLIVRA and TEGSEDI to the patients that depend on those drugs. And this is very important because it allowed us at Ionis to focus on the next-generation molecules for TTR amyloidosis and diseases related to severe hypertriglyceridemia or LICA drugs. Last month, we announced our first ever co-commercialization partnership this with AstraZeneca and toward the commercialization and the development of eplontersen. And then this year, we're looking forward to providing additional reports on our commercial strategy and our progress, including the readout of eplontersen Phase III results in patients with TTR amyloidosis with polyneuropathy and where our launch plans are to make that drug successful on the market. And also, we look forward to providing updates on our -- the pipeline beyond the 3 near-term commercial assets we plan to commercialize later this year. Moving on to Slide 14. These are our 3 near-term commercial assets that we highlighted at our Investor Day last year, eplontersen, olezarsen and donidalorsen. Eplontersen is being developed for all forms of TTR amyloidosis. This is a drug with a very large patient population estimated in prevalence up to 500,000 patients in major markets today. Eplontersen has the potential to change the standard of care for patients suffering with TTR amyloidosis. And this drug has blockbuster potential. Olezarsen, again, being developed for patients suffering from severe hypertriglyceridemia, high-triglyceride. This is a disease that afflicts millions of patients around the globe. Olezarsen has the potential to be a first-in-class medicine management of patients with high triglycerides. And this drug, too, also has the potential to be a blockbuster medicine on the market. And donidalorsen prophylactic treatment for hereditary angioedema and has a profile based on our Phase II data to be a best-in-class prophylactic treatment for patients with hereditary angioedema and also represents a very sizable and attractive market for Ionis. So lots of opportunity for these drugs. We're making great progress in our Phase III studies and delivering these drugs to the market and the question, of course, is how do we realize that potential. What are we going to focus on to make these drugs be very successful in the market. On Slide 16, eplontersen, our strategy there for TTR amyloidosis. Well, we know that this is a very large market opportunity, many patients and the vast majority of these patients aren't treated today, effectively or treated at all. So we have the opportunity to bring eplontersen and to penetrate this market very successfully, very effectively, and that's what we're going to do. We're going to take advantage of our potential best-in-class profile for eplontersen, our LICA profile, and we're going to leverage the strength our co-commercialization partner, AstraZeneca, who has global strength, especially in the cardiovascular field to make sure that we compete very effectively and win in the marketplace for TTR amyloidosis. And we take advantage of the fact that our cardiomyopathy study is the largest cardiomyopathy study ever conducted for TTR amyloidosis and is potentially the most informative study that will be very important for prescribers and for patients. Olezarsen, our strategy to win on the market there. Well, we know and we'll take advantage of the fact that patients suffering from diseases related to high triglycerides are very underserved. Fibrates in fish oils are not effective enough, not by far. And we have a potential best-in-class molecule in olezarsen and first mover advantage, first to the market with a drug as affected as olezarsen is and we'll take advantage of all that be successful on the market. And we have it on our side, the fact that we're targeting the master regulator of triglyceride levels in the body APOC III, which is also an independent cardiovascular risk factor as well. And then donidalorsen on Slide 18, our strategy there will be to replicate the Phase II data, which was stunningly positive in our Phase III study. To demonstrate that this truly is a best-in-class molecule for the prophylactic treatment of hereditary angioedema, and we'll take advantage of the fact that there remains a big unmet need for better treatments better efficacy is desired by patients, better convenience and better tolerability. And we'll focus on all that and then once we get to the market, our strategy will be to switch patients from standard of care on donidalorsen. Phase III studies are underway for all 3 of these drugs. So that is a quick overview of where we are in our commercial strategy and the progress we're making now a little bit on our -- the advancements we're making in technology, a key area for Ionis today. We're making many -- we have already made many advancements in our technology that are providing benefit to drugs today that are in our pipeline in development. Some of the recent advances we've made today that we're incorporating into our drugs is taking advantage of our leading platform and liver LICA, targeted delivery to deliver. We're expanding that pipeline, but more than that, we're actually combining liver LICA with new chemistries that we've discovered and invented here at Ionis, such as our Generation 2.5 chemistry, coupled with liver LICA that are producing best-in-class molecules like potentially our PCSK9 best-in-class molecule with AstraZeneca. We're developing new LICA. In the nearer term, our muscle LICA platform is showing great promise as a potential best-in-class platform for targets in muscle and new chemistries such as our new backbone chemistry, MsPA providing greater stability and durability for our oligonucleotide drugs and other chemistries that are providing greater potency and greater durability for other applications, such as in CNS, like our -- SPINRAZA follow-on molecule that is positioned to show even greater durability in patients suffering with spinal muscular atrophy have we reported out on last week. Investments we're making today will also benefit drugs of the future down the road, where we're going. We're working on additional LICA platforms, LICA strategies, and those are showing great promise to open up new tissues, optimizing through medicinal chemistry, CNS applications, whether it be penetration of the blood-brain barrier or reaching other cell types and regions of the brain, and we're optimizing new routes of delivery through medicinal chemistry, such as pulmonary delivery in other delivery approaches. Slide 22 here, just as a quick summary of where we are with our LICA advancing and expanding LICA platform. We have a well-established LICA platform for liver, as everybody knows, we're opening up new organ systems and tissues, already showing proof of concept in pancreas and now in muscle, skeletal muscle and cardiac muscle and new tissues are coming. And we're utilizing a whole range of different ligands attached to our drugs to open up these new tissues, carbohydrate ligands and traditional peptides, fabs, antibodies, protein mimics and constrained peptides. This is just some data as an example from our muscle LICA platform our Muscle LICA platform has benefited greatly from 2 excellent partnerships that we established over the last couple of years, 1 with Bicycle Therapeutics and one with Aro Biotherapeutics. This is an example of a novel ASO conjugate that we're working on, we're developing, demonstrating a greatly enhanced potency against the target and skeletal muscle. And what you see here is the novel ASO conjugate on Slide 23, showing on a mass basis, substantially greater potency and target reduction compared to a antibody fragment, conjugate or, of course, a naked ASO. We've demonstrated -- replicated the same data in cardiac muscle as well as with siRNA approaches. So that's a quick overview of the advancements and the focus of our technology investments and advancements. Our third strategic objective to bring Ionis to even greater success to grow -- to ensure substantial growth in the future is, of course, to deliver drugs, transformational drugs to the market, and we're well on our way to achieving this. Slide 25 shows our 2 leading therapeutic franchises, our cardiovascular franchise, a leading franchise in this area. At Ionis, we're addressing essentially all of the major unmet needs -- unmet risk factors that cause cardiovascular disease today. Today, we have 4 ongoing Phase III studies and 9 drugs in clinical development in totality. Our leading neurological disease franchise continues to deliver drugs that have the potential to transform the lives of patients suffering from neurodegenerative and neuromuscular diseases. We have 3 ongoing Phase III studies in progress and 11 medicines in clinical development in neurology, 8 in Phase II development. We also have an emerging specialty rare pipeline of drugs that are outside these core franchises that we believe in them, we're developing and potentially will commercialize drugs like donidalorsen for hereditary angioedema. This is what on Slide 26, what our Phase III pipeline looks like today. It's really bridge in our view. It's broad and it's industry leading. Today, we have 6 drugs in Phase III development in 8 Phase III trials. Three, from our neurology franchise, 4 from our cardiovascular franchise and donidalorsen from our specialty rare franchise. And what you can see on this slide is that we expect Phase III data readouts every year in a steady cadence for many years to come with some readouts having several readouts all within the same year. These drugs are being developed for severe rare disease indications as well as for very large patient populations estimated in the millions for diseases like Lp(a) CVD and severe hypertriglyceridemia. And right behind this Phase III pipeline on Slide 27 is an even richer mid-stage pipeline with success from any -- and all of these drugs potentially reaching Phase III development thereafter. We have more than a dozen Phase II drugs. Many of them are in the late stages or mid-stage development Phase IIb studies from our neurocardiovascular in our specialty rare pipeline in several of these Phase II drugs were expecting to read out and report on this year. And with all this our partnerships and our pipeline to reach commercial drugs that will reach commercialization or commercial pipeline is setting up Ionis for sustained and substantial revenue growth for years to come. We have multiple streams of revenue that come into high on is through our partnerships. We refer to this as R&D revenue. And in our commercial pipeline, we'll grow. Revenue from our commercial pipeline will grow with time. Today, it's led, of course, by SPINRAZA, which is a blockbuster medicine for SMA, and we expect SPINRAZA continue to perform as a blockbuster for many, many years to come. And then you can see a very large number of drugs potentially reaching the market in the near term, in the early to mid-20s. And then after that, really essentially a tidal wave of drugs potentially reaching the market beyond this point, all contributing to what we believe will be a substantial growth in revenue for the future. Of course, building out the commercial organization and conducting our own Phase III studies and bringing these drugs to market and investing in science and technology requires investment, and we are well positioned. We are well capitalized to make all the investments we need to make to ensure substantial growth for the company. Today, we are well capitalized with approximately $2 billion in cash and with steady stream of revenue expected in the -- now in the near term and for many years to come, allowing us to invest in 3 strategic objectives that I laid out for you today. So on Slide 30 is our summary of our key 2022 catalysts. It's setting -- it's shaping up to be a very exciting and rich year in catalyst for Ionis in 2022, starting with data readouts. We're looking forward to quite a number of data readouts from our pipeline highlighted, of course, by our Phase III data, eplontersen for TTR amyloidosis with polyneuropathy, which we're expecting to readout by midyear this year, several drugs from our cardiovascular franchise to readout Phase IIb studies expected to readout this year. And then other Phase II drugs from our neuro and our specialty rear pipeline. You can expect readouts for this year. With a positive Phase III readout for TTR amyloidosis and polyneuropathy for eplontersen, we're expecting to file for approval for this indication for eplontersen this year. And then there'll be several, many updates this year throughout the year. On technology advantages like we did last week when we announced partnership and the licensing of a follow-on molecule to SPINRAZA for spinal muscular atrophy with Biogen and new important key study initiations, like we did last week when we announced the initiation of a second Phase II study for our TMPRSS6 drug in polycythemia vera. And we're very proud of the fact that we announced last month at our Investor Day, the publishing of our inaugural corporate responsibility report, and we're looking forward to providing further updates on our corporate responsibility reporting in the future. So to conclude on Slide 34, we are on well on our way to achieving our vision of becoming a highly successful, leading fully integrated biotechnology company. We're well positioned for accelerated growth. We have many attractive near-term commercial opportunities, reach rapidly approaching the market. We have one of the richest Phase III pipelines in the industry, and we're well on our way to creating a commercial organization of excellence to match the excellence we have in research and in development. And we're investing and making great progress in technology to continue our leadership position in RNA target therapeutic and 2022 truly is promising to be a truly exciting and rich year -- rich catalyst year for Ionis today. Thank you very much. And now I guess we'll open it up for questions, Jess.

Great. Thanks, Brett, for that presentation. [Operator Instructions] Maybe starting out with donidalorsen in HAE. You had some strong data in 2021 and have talked about, including every 8-week dosing regimen in the pivotal study. Have you seen any PK/PD data or attack rate data that supports that every 8-week dosing, whether in your preclinical characterization or in the clinic? And if -- and do you plan to share any of that data with investors in 2022?

Yes. To all of that, we're really excited, obviously, about donidalorsen. As it -- we really do believe it's a best-in-class drug for -- potentially for treatment, prevents HAE attacks for patients suffering with HAE. We have several lines of evidence that we believe bimonthly as well as monthly dosing will be effective in preventing these attacks. We have quite a bit of preclinical data that supports this in animal models. But more than that, our Phase I data that we actually showed some of that data at Investor Day last month. And we published that, it shows that we suppress prekallikrein levels the target for donidalorsen substantially. We maintain suppression of prekallikrein well over 2 months following cessation of dosing. So that's supporting evidence. In addition, we in our open-label extension study from the Phase II study that you referred to earlier, we do have some patients having been dosed bimonthly and those patients do pretty well. And we're looking forward to reporting some of that data in the second half of this year. And indeed, our Phase III study design does include a cohort with bimonthly dosing as well as monthly dosing. So we're pretty confident that bimonthly dosing will provide the adequate protection for patients suffering from HAE.

Got it. So when you made the decision to include bimonthly dosing in the Phase III, have you seen the kind of data accumulating with that dosing frequency in your Phase II extension?

Yes. I mean we've certainly seen some of that data and that contributed to our decision to have a cohort of looking at bimonthly dosing study. It was really the totality of the data and Jess, Phase I data, the preclinical data, but also the open-label data that give us confidence to include a cohort looking at bimonthly dosing. And we think that monthly dosing will provide the convenience that patients really need for this -- we really want for this to protect themselves, bimonthly dosing is just an added benefit.

Got it. How long are you expecting it will take to enroll that Phase III trial?

So we just started enrollment in the fall of last year when we announced the start of the Phase III trial. We're expecting to roll through this year, and we're looking forward to -- for data readout from the Phase III study in the late '23, maybe early '24 time frame.

Got it. Switching to fesomersen, why do you -- ESRD patients have an increased risk of thrombosis? How are they currently managed? And what's the unmet need for this group of patients? And why do you believe fesomersen can do better than standard of care?

Our Factor XI drug -- Factor XI LICA drug fesomersen as I mentioned in my presentation, we're expecting Phase IIb data readout with Bayer in the first half of this year. Factor XI is a really exciting target. It really has the potential to change standard of care from prophylaxis. The Holy Grail has always been in this field to be able to develop an antithrombotic that doesn't promote bleeding. And that's been largely a complete failure for many decades. Factor XI has the potential to do exactly that. We've shown that -- we were first to show that in a Phase II study in knee replacement patients that we were able to achieve superior compared to standard of care heparin, antithrombotic efficacy without bleeding in that Phase II study with a precursor to fesomersen the non-LICA version of that. And we also took the precursor through end-stage renal disease Phase II study, which we showed, we really replicated the same data. We then move the LICA forward, which is fesomersen through Phase I, and now it's in the Phase IIb study that Bayer is conducting. These patients with end-stage renal disease are not adequately treated. They're at high risk with thrombosis and high-risk for bleeding and the reason they are because of the dialysis procedure. It disrupts platelet function. It disrupts other aspects of the hematological system that promotes thrombosis. These patients suffer from thrombosis at a very high rate and they can't be anticoagulated effectively because they are at high risk for bleeding. That's a perfect scenario for a drug like Factor XI where -- which can provide protection thrombosis but avoid bleeding. So that's why we're looking at end-stage renal disease in this Phase IIb study. There are many other opportunities as a -- for a drug like fesomersen to protect patients from thrombosis who are at risk for bleeding.

Got it. In addition to fesomersen, I think Bayer is also evaluating another Factor XI targeting asset in a separate Phase II study. Can you help us understand the key differences between the 2 therapies?

Sure. The other drug that you're referring to is a monoclonal antibody. It targets an active site, the active site in Factor XI, Factor XIa. We're, of course, blocking the production with our drug of Factor XI from the liver. So very different mechanisms of action. They are both targeting Factor XI as you indicate, and they're both being evaluated in ESRD, end-stage renal disease at this time. We're ahead -- Some of the key differences, I would highlight are primarily is this. The fact that there's an antidote for an antisense molecule like fesomersen is a big advantage, although we don't expect bleeding, by inhibiting Factor XI, having an antidote available, which is the antidote, fresh frozen plasma is utilized all the time today or recombinant Factor XI, which is also available. Since we're depleting the production of Factor XI, you can actually replace it if you ever got into a bleeding crisis where you had to go into surgery and you didn't want to have an anticoagulant floating around blocking coagulation you can reverse it very quickly. You can't do that in a long-acting antibody, which is continuously inhibiting factor in the circulation. That's a very key advantage for the antisense approach over an antibody, and it's something we've been and Bayer have been focused on.

Great. There's a question on the portal here about TTR, specifically TTR cardiomyopathy. So the question reads, what did Ionis learn from BridgeBio's ATTR cardiomyopathy Phase III setback? What's the implication for Ionis? And can you highlight the difference in Ionis' trial design, including patient selection, stabilized or use, et cetera?

Yes, we don't see any read-through from BridgeBio to the cardio transform Phase III study for eplontersen. I mean they're very different studies. -- and they start with a very different mechanism of action. We believe that a silencing mechanism of action like eplontersen will be more efficacious, substantially more fiction in stabilizing mechanism more than that. That was the dose study done with an endpoint that is looking at a functional readout in 6-minute walk test, which can be subjective at times. We have a cardiovascular outcome trial that's much longer than what that study involved. We were estimating about 30 months of treatment, patients on drug for 30 months. And we're looking at very hard endpoints in our cardiovascular cardio transform Phase III study. So we just think we have this under control. And of course, we have the ability to monitor those end points, the events in our cardiovascular outcome trial to make sure that we're having the number of events we need to have in our study to ensure for a robust output that we designed the study to achieve. Our study allows the use of tafamidis in the study. We're expecting about half of the patients in the study to beyond tafamidis at the end of the study and about the other half as naive. And we have sized the study appropriately so that we believe that we'll be able to make comparisons to of eplontersen versus tafamidis versus -- and eplontersen versus naive patients. And this, we believe, is very, very important. -- for patients and prescribers to have that type of information to be able to know how to prescribe eplontersen with or without stabilizers once eplontersen reaches the market.

Great. Maybe switching to AGT-LRx for uncontrolled hypertension, where are you with the 2 Phase II, I think one is on controlled hypertension, another one in chronic heart failure. And could we see data from these trials in 2022?

Yes. We actually have 3 trials in progress targeting AGT for hypertension and heart failure. The lead molecule is our Gen 2 LICA molecule targeting AGT. We already achieved proof of concept in a Phase IIa study in patients with refractory hypertension, which showed statistically significant reductions in blood pressure in those patients. That was reported early last year. That we then move that drug into a Phase IIb trial, same patient population, a little sicker. These patients are on 3 to 4 meds to control their hypertension yet they're still not controlled. And we're expecting that molecule -- that study to read out late this year, the Phase IIb study. We also initiated a heart failure study for that drug, which is in process, and we're hoping maybe we'll get a readout this year, but it probably will move into next year. In addition, we started and completed a Phase I study last year looking at a Generation 2.5 LICA drug target AGT. And it was very successful, substantial improvements in potency for targeting AGT and long durability. And we're now just starting a Phase II study for this follow-on molecule -- not necessarily follow molecule, but a new molecule targeting AGT in refractory hypertension. So that study is just beginning, and it will probably read out next year.

Great. For AGT-LRx, is this actually something you think about as a good candidate for a new partnership? And if so, when do you think of it as the best time to partner? Is that something that would happen after Phase II?

Potentially, partnership is in the cards for AGT. I mean this refractory hypertension involves -- it has a prevalence of tens of millions of patients globally. And the resources that will be response -- that will be required to really conduct an appropriate Phase III study and to bring a drug like this to patients globally in an optimal manner, may require resources that are outside what we have today at Ionis. So it's potentially in the cards for us to partner, we will more than likely wait until we have Phase II data so that we can actually we know what we're partnering so that we actually the value of the assets we're developing before doing so. So it's a potential partner out licensing program. But I think we need to see data before we actually move on to partnering.

Makes sense. Another question on the portal here. Can you confirm if the deal with Aro Therapeutics is for muscle targeting. Is that -- was that what you said in the presentation, I think the original announcement just said kind of extrahepatic tissue.

Yes. Aro Biotherapeutics partnership involves several different tissues that we're focusing on, and it includes muscle, but it goes beyond muscle.

Great. So with that, I think we are out of questions and about out of time. So thanks for the presentation, Brett and a thoughtful Q&A, and thanks, everyone, for listening in.

Thank you, Jess. It was a pleasure.