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

We're about to get started with our next company presenter. Thank you for joining us at the BofA Annual Healthcare Conference. My name is Jason Gerberry. I'm one of the biotech analysts at BofA. And I'm pleased to be introducing our next company presenter, Ionis Pharmaceuticals and CFO, Beth Hougen. So Beth, thanks so much for joining us.

Thanks for having us. It's great to be here and to be in person.

Yes. Great. Well, we were talking about this before the start here. But maybe if you can just talk a little bit about Ionis and over the last few years, there's been a lot of changes in terms of the focus, what do you keep in-house? Will you partner? What do you guys want to be as you look to integrate with certain assets and bringing them to market yourself versus partnering? Wondering if you've kind of found that optimal mix? I think one feedback we've gotten is the decision to kind of partner eplontersen prior to having that Phase III data, which is kind of viewed as a traditional valuation inflection point. What drove that decision versus like donidalorsen, a product that's in Phase III, investors are really attracted to that asset. And you talked about that as a partnership opportunity. So maybe if you can just maybe talk strategically about how the company is thinking about which assets to prioritize both internally and externally?

Yes. Absolutely happy to. I think maybe I'll start with just sort of unpacking that a little bit, if I could.

Sure.

There's a lot in there. Really, since Brett Monia took over as CEO in the January of 2000, he has really moved the company in a new direction with a new business model, a focus on commercializing our medicines ourselves in a variety of different ways, certainly focusing in the United States first and then eventually building out into Europe. And we've got 3 near-term opportunities right now at eplontersen, which you were doing a co-commercialization co-development relationship with AstraZeneca and olezarsen and donidalorsen. And we can talk about each one of those individually at some point. But I think as you think about Ionis, I would say one of our strategic priorities is to continue to grow the Ionis-owned pipeline and to bring more and more of our medicines to the market ourselves. We're focusing in cardiovascular, and we're focusing in neurology. And those are 2 areas where we feel the antisense has a very unique opportunity to really make a difference for patients. And then I think if you -- to think about what's partnered and what's not partnered, and we'll talk about eplontersen and why we made the decision to do a co-co with AstraZeneca. I think it was a really the right decision for that asset. But olezarsen is a really exciting drug for severe high triglycerides, and that drug is one we're taking to the market ourselves. And donidalorsen is also a drug that we're going to take to the market ourselves. And then coming behind that is another wave of medicines, but we'll be talking about those a little bit later, that's still a bit early to focus on those. So let me talk about eplontersen, if I would, if you don't mind, and talk a little bit about why we decided to do the AstraZeneca collaboration for that particular drug. And it's really a unique situation for Ionis. As you mentioned, historically, we have -- we've done the discovery through our very prolific discovery engine. We've developed our drugs and then we've partnered them out to big pharma for late-stage development and commercialization. With eplontersen, it's a co-co. It's a true co-development co-commercialization relationship. We are doing all of this broad Phase III development for that drug in polyneuropathy and cardiomyopathy. So a very extensive Phase III effort on our part. We're also going to be -- we have a seat at the table with AstraZeneca for all of the global strategy on the commercialization front. And we'll also be really launching a medical affairs team and sort of a nurse case managers, the hub. So a lot of that sort of medical and back office work we're going to be doing ourselves. So we're going to let AstraZeneca use their reach and their strength in commercializing drugs and really the global reach from a sales force perspective as well as obviously getting a lot of commercial expertise from them. The reason it made sense to do that with eplontersen, and it doesn't make sense for olezarsen and donidalorsen is because it's such a large growing market. It's estimated at well in excess of $10 billion right now. I've seen actually estimates very recently that are even greater than that. And it's a very competitive market. So it makes sense for us to have the strength of an AstraZeneca particularly with their focus on heart failure and heart disease to sit aside us and to really ensure that we bring to market the strength of the 2 companies to be able to capture a very, very meaningful part of this very big market. Olezarsen is different because we have first-mover advantage. It's a big market. It's about 3 million patients in the United States. But because we've got first-mover advantage and because we can -- we know this market very, very well, and it doesn't have the same competitive dynamics, it's one where it makes a lot of sense for us to commercialize ourselves. Similarly, with donidalorsen, it's a smaller market, but a growing market. There's some competitive dynamics, but we think there's plenty of room for a product with a profile like donidalorsen. So hopefully, that gives you a little bit...

Yes. No, that was great.

Yes.

Maybe we'll start with eplontersen and you've got the polyneuropathy data coming up midyear. So maybe just to ask a question pretty bluntly, like what does it take to flip the table with the competitive dynamic that's going on in the market now, right, where TEGSEDI holds a junior position versus Alnylam's ONPATTRO. And so, one of the feedbacks I get as well, even if that study is positive, the follow-on on Alnylam product may have a better dosing profile. So as you think about sort of the -- how you define a positive outcome here. And maybe I'll leave that to you to address.

Yes. So it's -- with TEGSEDI, I think the biggest drawback that TEGSEDI has had all along is that it's required monitoring. And that is not something that we're seeing in any of our LICA products. We've really designed our LICA technology to be able to have a much greater potency, therefore, a much smaller dose and therefore, we're not seeing any of the safety issues that we have with TEGSEDI. So we don't -- we're not monitoring right now in our Phase III studies or any of the earlier studies, and we don't anticipate to have to do that commercially. So that takes the TEGSEDI efficacy profile, which we think is attractive and really amplifies on it. It means we'll have a better efficacy profile. We'll have a very competitive safety profile. Everything we're seeing from a blinded basis in the polyneuropathy study is that this is a very clean safety profile, very consistent with all of our other LICAs. And so then it comes down to dosing. And one of the things we've learned with TEGSEDI is that patients really value the ability to take their drug at home, when they want to in the comfort of their own home, if they are still working, they're traveling for work or they're traveling for family, wherever they are, they can take their drug. And so we think that that flexibility in being able to dose at home is going to be a very significant benefit for patients. And frankly, our market research supports that. So we think that will be a key differentiator. And of course, that means will be a Part D versus Part B, and we think that that creates some real access benefits for eplontersen over the competitor.

Okay. And you mentioned safety and review safety on a blinded basis. So the AEs of note are concerned with TEGSEDI are presumably captured in lab abnormalities, thrombocytopenia and renal AEs. So that is something that you're at least able to assess on a blinded basis in that ongoing study?

Absolutely. And we've seen nothing. It's very, very clean. And that, as I said, is very consistent with the now thousands of patients that are on our LICA drugs. And think about pelacarsen, for example, for Lp(a), that's in the 8,000 or so patient cardiovascular outcome study. And Novartis is running that study, and again, a very clean safety program. So lots of experience to support what we're seeing on a blinded basis.

Sure. Okay. Polyneuropathy is interesting market opportunity, but the massive opportunity is obviously cardiomyopathy. And -- so I imagine that there will be data that emerges over the course of this year that investors are going to be scrutinizing right or wrong to get a read across to whether silencers can actually alter the disease course of cardiomyopathy hit the 6-minute walk or get a line of sight as to whether or not you're getting the right window of treatment to benefit these patients because they can kind of crash pretty hard if their disease is left unchecked. So one aspect of your polyneuropathy data will be subgroup data will look at patients who have sort of mixed phenotype that's both polyneuropathy and cardiomyopathy. I know that Brett talked about on the last quarter call that these patients are still different. So just trying to get a sense of some of the data that you'll capture and report in the subgroup. I imagine it won't be in the initial top line data, but eventually, we might get a look and how relevant treatment with a silencer could be to these patients' disease course on their cardiomyopathy disease? Is there any data that you've captured in the past in these patients that might give you a line of sight there?

Yes, it's a great question. I would say, to your question about top line data, we expect that mid this year, we report polyneuropathy top line data of mNIS+7 quality of life. Obviously, safety is going to be a really important focus for top line data. As far as the cardiac measures that we're capturing in the polyneuropathy study, I would expect that we will report those probably at a medical conference when we report the full data set. But to your point, that will be later -- likely later this year as those data are analyzed and come in. In terms of what we have seen to date, you may recall, we have an ongoing investigator-initiated study with inotersen or TEGSEDI. And that study has been going on for about 5 or 6 years now in cardiomyopathy patients, hereditary as well as wild-type cardiomyopathy patients. And it's -- what we have seen is a real improvement in those patients across a whole host of cardio cardiac measures, the typical ones you would expect, proBNP, left ventricular heart mass and a whole 6-minute walk test, a host of those various different measures. And then frankly, those -- many of those patients as cardiomyopathy patients have been on the study longer than their prognosis was, had they not been treated. So that gives us at least a level of confidence. It's a small study, small numbers of patients, it's open label. So you have to take all of those into consideration and caveat my comments, but it does give us a little bit of visibility into what we think eplontersen could do for these patients, either in mixed phenotype with polyneuropathy and cardiomyopathy or the cardiomyopathy patients when we get to that population.

Okay. And with your Phase III cardiomyopathy study, the recent announcement to expand the enrollment, if I could summarize, it sounds like this is a decision rooted in some conservatism, let's boost the enrollment. Let's make sure that we get enough patients in the key subgroups of interest, and there was commentary around geographies, which I assume means getting enough naive patients so that you can have well-sized subgroups, both in the tafamidis treated as well as the tafamidis naive. And I imagine ex-U.S., there's a lot of geographies where tafamidis isn't approved and so you can ensure that you kind of bolster your naive cohort so that you at least have apple-to-apple data because I believe your competitor is not going to have as much in terms of the tafamidis treated patient group.

Yes. That's exactly right. This was exactly the right time to make this -- make this amendment changes to the study. And the whole thinking is, to your point, how do we ensure that we have the subgroups of patients and the data for these subgroups so that we can give those data to the physicians so that they can treat these patients in whatever way they feel is most appropriate for the patient. And we're looking out a couple of years into this market, and we've seen the market evolve over the last -- we've been studying TTR now for nearly 10 years since the beginning days of inotersen or TEGSEDI. And so we've seen tremendous evolution in the diagnosis of these patients and just the awareness of this disease. And so we want to make sure that we have the most robust data set so that the physicians have what they need to make the best treating decision for these patients. So tafamidis is certainly going to be an important part of that treatment paradigm. It's going to continue to grow, I think, in acceptance. But to your point, it's not widely available, either approved or reimbursed in a lot of parts of the world. And so we also need to ensure global access to eplontersen, and that means studying the drug in patients who are naive to treatment and making sure that those patients also have access to eplontersen, if so desired by their physician. Right now, the way we -- by making the study bigger and making it longer, we feel like we're able to do that even better that we're, to your point, being a bit conservative, wanting to take advantage of the element of time and the fact that we were fully enrolled under our original size of the study and catching these patients before they roll into the open-label extension. So this is the time if we were going to make any changes to the study for us to make them, before we lost patients to the open-label extension and then had to play sort of catch up, if you will. So now we have, by far, the largest study. We'll have the ability to have a good balance of patients that are naive to treatment who are on tafamidis, patients who are hereditary versus wild type, various different mutations. I think there's some diversity dynamics that we want to -- diversity measures that we want to ensure that we're looking at very carefully. We know that there are aspects of these patients, the African-American population, for example, who are very much underserved and a very big part of this. We want to make sure that we're capturing those patients. And by adjusting the study size and duration, we feel like we have really optimized our ability to do all of that.

Okay. So I know that a lot of the events are back half loaded into the study, right? So you got some questions about was this driven by lack of event rates? There's a lot of questions about getting these patients in the right window to treat. You don't want to get in too early when there's no events. You don't want to get them too late where they're too far gone. So can you talk about your -- imagine that things are going at least according to plan from an event rate perspective and your ability, I imagine the model after the studies that were conducted by Pfizer in terms of the representation of heart risk or risk classifications such that you have a confidence level that you're getting these patients in that right window to treat.

We do feel like we're getting the patients in the right window. It's also the case -- you said it, I think, very well. In this type of a cardiovascular outcome study, you would expect to see your events grow as you get to the latter part of the study. And we're still a little bit early before we've really seen the inflection point. So it's hard for us to know exactly what that event rate trend is going to look like. But we're feeling confident that we've got the right patients. We've been monitoring the study all along to ensure that we've got the right patient dynamics. And to your point, that's another one of those dynamics that we want to make sure we get right, which is the -- how sick are these patients. We want to make sure we get that right as well. So all of those things are -- were important in our consideration of these amendments.

Got it. Okay. Maybe shifting gears to HAE. This is an interesting market right now. It's like Takeda has got the dominant position in the marketplace. You talked in the past about dosing frequency, onset of action and potentially attack rate as being sort of key areas where you can differentiate. Can you talk about like the importance of each of those features and where you think you have the best chance of sort of coming in as you define it or describe it as a competitive market where the bar has been set pretty high by an entrenched player?

Yes. So donidalorsen is just one of those unique drugs where we hit on all of the really important efficacy measures for these patients. What we know from all of our primary research is that these patients still get attacks even if they're on the existing therapies. They're really, really debilitating in that they worry about their attacks constantly or the possibility of an attack constantly. So being able to put them out of their concern to say -- "You don't have to worry about this; this drug is going to keep you well controlled" -- is a major factor in these patients' decision on how to -- what drugs to take. So the existing therapies you can -- particularly with Takhzyro, you can treat every 4 weeks or you can treat every 2 weeks. And what we've learned is that most patients are on the every 2-week dosing in order to be able to stay controlled on an attack basis. What we can offer them is a very rapid onset of action. So after the first dose, about 97% of the patients were attack-free and stayed that way through the course of the 17-week study and have continued to stay that way through the open-label extension period to date. And so you've got rapid onset of action, you've got the ability to stay attack-free. So very comforting to these patients that they're not going to have to deal with an attack and potentially an attack that could be fatal. And you also have the convenience and flexibility of once monthly subcu, very small auto-injector dosing that these patients, frankly, don't have right now, either with Takhzyro or with the oral, neither one of them have dosing paradigms that are particularly attractive. And so I think what donidalorsen has the potential to do, of course, we have to show this in Phase III. We have to support all that we've seen in Phase II and Phase III. But if we can do that, I think this drug has a very, very important place in the treatment paradigm for these patients. And we know that patients are willing to try new therapies because they're already moving away from Takhzyro and going on to ORLADEYO and trying the oral. So we know that they want that dosing benefit of an oral. They don't like having to take a very uncomfortable injection every couple of weeks. It's very viscous, is very uncomfortable and painful. And so we think that we're hitting on really on all of the key parameters, and we'll see how that plays out in the Phase III. In the meantime, we're actively preparing to launch this drug into this market.

Okay. Can you talk about the relative split of that patients -- proportion of patients on the 2-week, first 4 weeks? And just trying to get a sense of ultimately how this market could segment in the future with your value proposition versus oral versus you've got Takhzyro out there. And obviously, they have a solid signal on lowering attack rate. But as you mentioned, the viscosity, the frequency of dosing, maybe they've left an opening for competitors.

Yes. So within their existing drugs, you only get that really strong attack-free data if you dose every other week. So every other week you have it. So if you do it every 4 weeks, their attack rates, the freedom from attack rates is very low. It's only, I think, in the 40% range. So we can obviously show a much, much better improved profile from that perspective. I think this is a market that's growing as well. For a long time, there wasn't really an acceptance of prophylactics in this market, and that has grown quite a bit over the course of the last number of years. And we would expect to see that growing. Estimates right now have this going to be into a multibillion-dollar market, and we think we can have a very sizable component of that. Possibly not a $1 billion blockbuster, but certainly approaching that. So very meaningful for Ionis. And it's a drug that we're going to commercialize ourselves. So it's not a drug that we think that we have no intentions of partnering this drug because it's frankly a market that's served by a relatively small number of physicians, and therefore, we can have a very targeted marketing and sales effort, and we can do this within our -- within Ionis. And we can leverage what we're building for eplontersen and even more so for olezarsen and bring donidalorsen along beside those.

Okay. My recollection from covering Shire once upon a time was this is primarily a U.S. market. You're not running head-to-head comparative trials to sort of support at least a European approval. And so as you think about the market opportunity, presumably that's going to be concentrated almost entirely in the U.S.

It's primarily in the U.S., but the ex-U.S. market is actually growing. There's becoming more and more recognition of the fact that a prophylactic treatment of these patients is good for health care systems. That's taking time, there's no question. And it's certainly going to be concentrated in the U.S. Our focus commercially across all of our drugs is going to be first in the United States anyway. We think that's obviously the most important market is where we are, and we're going to look to do, I think, more creative partnering for ex-U.S. markets, where we do more light distributorships or those types of structures to be able to capture a large percentage of the upside for our drugs that we're commercializing in the U.S., but where we really don't want to build out infrastructure ex-U.S. right away.

Okay. Maybe in the last 5 minutes or so, shifting gears to ATT. And you've got Phase IIb data coming up in the second half of the year in terms of what you're looking to see, how that would potentially inform future development strategies?

Yes. So angiotensinogen is actually a really interesting drug. You'll remember, we had Phase II data in treatment resistant hypertensive patients in which we showed a really nice -- obviously, very nice angiotensinogen knockdown, but importantly, we showed about a 12-point difference in systolic blood pressure in those measures. And then in a very, very attractive safety profile similar to what we've seen, as I've said earlier, across our LICA platform in general. What we want to do in our Phase IIb is to a bigger study, replicate those results continue to show strong efficacy. We think if you can get anywhere from 5 plus 10 plus reductions in blood pressure, in systolic blood pressure for these patients, it's a really huge benefit for these patients. In the Phase II study, we were able to get more than 50% of the patients at or below 140, which I think is a really important achievement. And importantly, because angiotensinogen is a liver target, you're not seeing any of the kidney toxicities or kidney issues that the ACEs and ARBs typically represent for these patients. So that's really important. Having that safety profile and being able to get these patients who are resistant to very high blood pressure and all of the other treatments to get them to goal or much closer to goal is really important. So we want to demonstrate that in Phase II, in the Phase IIb. We've got a heart failure study ongoing as well with this drug. And we're also thinking about life cycle management and less frequent dosing with our 2.5 LICA that's in a Phase II study in the treatment of resistant hypertensive patients as well. So all of those data are going to be important as we think about the next steps for this drug. I will say that as we think about what we want to keep for Ionis and commercialize ourselves and what we want to partner, this is a drug that deserves to be partnered. We think that there's more than 15 million patients in the U.S. with resistant hypertension, and we really want the breadth and the reach of big pharmaceutical partner for this drug. So we want to get that full data package and then we'll go look and find somebody who can really do justice to this drug and to these patients.

Typically, with those -- obviously, there is the large Phase III trials that come with it, and then there's obviously the commercialization cost on the back end. Could you fund clinical work with an asset like this? Or do you feel like it makes sense to kind of get it to a Phase IIb sort of signal and then hand it off?

It's a good question. We've got a very strong balance sheet. We've got a strong financial profile. It's really served us well over the years. But I don't think this is really where we should be putting our money. And we've got other places where we can be building our Ionis-owned pipeline and really holding on to value in other assets for Ionis and for our shareholders. And frankly, we're bringing more benefit to patients by doing these holding under drugs ourselves. This drug, I think, is one where it would make more sense to have the resources of a big pharma partner. I think the cardiovascular outcome study for angiotensinogen could be 10,000-plus patients. So it could be substantial. I just don't think that's the best place for us to invest.

Sure. And so speaking of another program that would probably be in the realm of pharma is Factor XI, right? So can you talk a little bit about your expectations for the program and what -- where you want to get the asset to demonstrate before potentially a logical handoff?

Yes. Well, so that actually is in Bayer's hands right now. And so they're running a Phase IIb study. Remember, with Factor XI, we actually published on this. We ran the seminal study, if you will, to demonstrate that Factor XI is a -- is really the sort of holy grail, if you will, of anticoagulation and antithrombotics where you have the ability to control clotting as well as not have any of the bleeding that you see with the Xas in particular. So that's in Bayer's hands right now. They're running a IIb in end-stage renal disease patients, and we're looking for those data later this year and then hopefully, a Phase III decision. And if that drug comes back because they have -- they also have in-house a couple of Factor XI drugs, we are very -- we will be very excited about that. We'll be very excited. So if it goes forward, great; if it comes back, great. So it's a really exciting opportunity in our view, so.

All right. Well, Beth, we're out of time, but I appreciate you taking the time to join us at the conference.

Yes. Thank you for having us.