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

Okay. Welcome back, everybody. For those of you just logging in, I hope it's not your first discussion. We've had a lot of great presentations today. I'm Joe Pantginis, Director of Research as well as Managing Director and Senior Analyst here at H.C. Wainwright. Welcome back to our HAE conference, a lot of great discussions like I said. Very happy to have with us Ionis Pharmaceuticals to present next as part of our fireside chat. Presenting for the company is Dr. Kenneth Newman. He's the Vice President of Clinical Development, Ionis. Dr. Newman is a physician, who trained at Duke, Johns Hopkins and the NIH. He was on the faculty at the National Jewish Center for Immunology and Respiratory Disease in Denver and at the University of Cincinnati before joining the pharmaceutical industry in 1998. Dr. Newman has over 20 years of experience in developing new drugs and is responsible at Ionis for the clinical development of all pulmonary and immunological compounds, and he joined the company in 2018. So thank you very much for being with us today, and I'm looking forward to a fruitful conversation. So based on time, let's just jump right into it.

Hoping you could first provide a brief overview of the donidalorsen development program, the mechanism, why the data you have seen in the clinic to date are promising to you and where things stand today?

First of all, thank you, Joe. I appreciate very much being invited to this forum and having the opportunity to talk about donidalorsen and HAE. So as you know, donidalorsen is an antisense oligonucleotide, and it's specifically targeted to decrease the production of prekallikrein, or PKK, which is a key protein, which is involved in the kinin-kallikrein system, which is so critical for the production of symptoms in HAE. Donidalorsen uses LICA chemistry, and LICA stands for ligand-conjugated antisense, bit of a mouthful. So what it means is that there's a ligand that you put to the end. You chemically attach it to the end of an antisense drug, and the ligand then takes the antisense drug to where you want it to go. So in this case, the ligand is called a GalNAc, which is a cluster of carbohydrates and it delivers this oligonucleotide directly to the hepatocytes to the liver. So what this does is this increases the potency of the drug by about 30-fold in human beings, and it does this by increasing the fraction of the drug that's delivered directly to hepatocyte. So the study data, which I'll discuss with you, are consistent with the clinical profile that we've seen across other LICA programs. and that we now have thousands of patients that have been exposed to LICAs. And these drugs really seem to be performing well in clinical trials and demonstrating significant benefit while being very well tolerated. So timing specifically to donidalorsen, we performed both Phase I and Phase II studies with this compound and they've both been reported in the New England Journal of Medicine, which I think is really good validation of how important this compound and these study results are. So what the Phase I study demonstrated is that there was a dose-dependent reduction in PKK, in pre-kallikrein in the blood. And it also demonstrated that the study drug was very, very well tolerated. With that, the drug went on to Phase II. The Phase II study was in 23 patients with HAE, 20 of which had HAE type 1 or 2. Patients were dosed with donidalorsen at 80 milligrams or placebo every 4 weeks given subcutaneously with a primary end point at week 17. The study demonstrated overall there was a mean reduction in HAE attacks of 90%, which is a p-value of less than 0.001. Now we know that antisense oligonucleotides don't work immediately, so we predefined in advance a key secondary end point, which was efficacy starting with the second dose. And in that analysis, this showed a mean 97% reduction in HAE attacks. And every patient but one was completely attack-free. What that means is that 92% of patients treated with donidalorsen were attack-free as compared to 0 patients treated with placebo. So this was also accompanied by a significant improvement in the quality of life in these subjects, which is what you'd expect if they have less attacks, you think their quality of life would go up. So not only was the total quality of life score improved, but there also was improvement in the subscales. So the instrument that's used is called the angioedema specific quality of life, or AE-QoL. And in this scale, 6 points is what's considered a clinically significant difference. With donidalorsen, there was a 26-point decrease as compared to placebo. And all the subscales were also significantly improved. The safety analysis of this study indicated that donidalorsen was well tolerated with actually a lower rate of adverse events than placebo. There were no safety signals detected either in the Phase I or Phase II trials. So due to the success of these studies, donidalorsen has entered into Phase III trials.

Perfect. And then you're in a fortunate phase right now, having donidalorsen in a pivotal study. Hoping you can give some details around the pivotal study design. And do you have feedback already regarding the need for only a single study to be able to file them?

Yes, absolutely. So the Phase III study is pretty similar to all the Phase III studies that have been done in HAE, and that is a double-blind placebo-controlled study. And this -- in our study, that -- this consists of about 80 patients with HAE. And these patients will be randomized to donidalorsen 80 milligrams every 4 weeks or 80 milligrams every 8 weeks or a matching placebo. There is a running period that lasts up to 8 weeks in which patients need to demonstrate at least 2 attacks. And after that, they will be randomized and dosed for 25 weeks. The primary outcome variable is the rate of HAE attacks, which is normalized to a monthly rate. There is also a number of secondary outcome end points, which include quality of life measures and so forth. At the end of the study, patients may then continue into an open-label extension study, or they may enter into a follow-up period. And we have verified with all regulators that a single efficacy study is appropriate for approval of the compound.

No, that's great. And then even based on today's conference and feedback beyond that in the past, a lot of drug development around HAE focuses now on patient convenience. So even in your pivotal study, why are you testing on the 2 dosing frequencies at this point? And do you believe that the q8 weekly dose regimen, you need that to be positive in order to be competitive or not?

Yes, thanks. So we don't think we need the q8-a-week dosing in order to have a potential best-in-class profile. If the data is positive, the dose frequency could further enhance the drug profile and make it more attractive. Having this longer dosing interval provides an option for patients, especially those patients that continue to have -- to seek improved convenience, especially over currently marketed products. So we're confident based on market research that the every-4-week dosing will provide meaningful differentiation, but we think the potential option of every-8-week could further enhance the value. So for example, it could provide confidence for patients even if they're taking the drug monthly, if they're late getting their dose that the drug is not going to wear out. So they go on vacation, they don't want to have to take their drug along with them, they take it a few days late, they are confident the drug has a very long half-life, and it's effective for quite a long time. It gives them confidence that the drug will help prevent their attacks over the long run. And there are some patients that clearly will prefer having fewer doses every year.

And it certainly seems, if you -- and just you could remind the size of the Phase III because if you can still approach that 97% reduction in attacks, the goal is ultimately to get to 0 attacks over the year, that would be very differentiated, even if it's, say, even a monthly dosing. So you'd have a double whammy of good stuff going on.

Exactly. And that's the gist is to have a potential best-in-class compound in terms of efficacy but also to have a potential best-in-class compound in terms of convenience for patients.

Got it. And the size of the Phase III?

It's approximately 80 patients.

Got it. Got it. Got it. And then really from an investment case standpoint, when could we expect to see the next data readout from the asset? And when will we see Phase III data?

Well, the first thing we'll be reporting will be the open-label extension study from the Phase II study. So this was the Phase II study that was reported in the New England Journal. And most of those patients rolled over into an open-label extension study. So we're going to be presenting 1-year follow-up data for all of those patients later this year at an upcoming major allergy/immunology congress. And then we'll be presenting additional data from that at additional allergy/immunology conferences early next year. So that will allow us to show data related to long-term efficacy and durability of effect. We expect the Phase III data that we reported in 2024.

Got it. Got it. So in biotech terms, not that far off.

Yes. It always comes sooner than you expect.

Of course, it does. So with regard to the Phase III, obviously, it's the frequency of attacks as the primary end point. But overall, how would you define success in this study about what other things you'd be looking at an overall profile?

So I think the major thing what we want to see is replication of the Phase II data. If we can continue to see a 97% reduction in attacks, we continue to see 92% of patients being attack-free throughout the duration of the trial, that -- and associated with that, a significant improvement of quality of life for these patients, that would be fantastic. That would be success. And if we can see success in the every-8-week dosing group, that would be sort of the cherry on top. So we hope to see, consistent with the Phase II, this rapid onset of action, sustained durability over 25 weeks as opposed to the 17 weeks, and then continuation of the favorable safety and tolerability profile.

Got it. Got it. Got it. And I'll just go off that last word about profile. As you're building the profile of the drug here, how do you see donidalorsen fitting into this relatively mature market? Because it's kind of interesting, and we were discussing this just before we went live, this is an orphan/rare indication that has 8 approved products. So how are you going to fit in there?

Yes, that's a great question. And the first thing I have to say, Joe, is how incredibly gratifying and you've seen this, how much improvement there has been in the HAE space. Going from not that long ago, where this was all too frequently a fatal disease and a debilitating disease. And it's easy to forget that now. So we're very grateful, and a little shoutout to the HAEA, who have been very good about pushing new therapeutics forward, but we're still looking for continuous improvement. There's still sort of next generations of products. So with regard to donidalorsen, we did market research, and we talk to health care practitioners to ensure that, as our Phase II data was reading out, that they see it as an advance in treating HAE and they did. We had a very, very positive response to donidalorsen. All the physicians that we spoke to saw it as a meaningful advance. So we did a good bit of market research. We've looked into the marketplace. And what we found is the following. And first of all, that allergists, immunologists as well as HAE patients confirm that there is still an unmet medical need, especially for an HAE prophylactic therapy that reduces the frequency and severity of attacks. Secondly, that a large majority of HAE patients that are on prophylaxis have already switched treatments in the past. And over 90% of them said they will consider switching in the future. And again, this is coming from our own market research done earlier this year. There's -- the approved therapies are getting better and better, but they still require frequent dosing, which may be daily, weekly, biweekly, sometimes intravenous, sometimes subcutaneous or oral. And these frequent dosings can negatively impact patient confidence and patient compliance. And what we know is going on here is patients just want to be normal. They want to have normal lives. They don't want to have to worry about when their next HAE attack is going to be. So that's what we consistently hear from patients. They just want to regain their freedom and improve their quality of life. So we know that donidalorsen, based on the Phase II data, can provide patients with this freedom. We hope that Phase III confirms this. But it comes with less frequent, monthly or every-other-month dosing, and also a reduced reminder of having to deal with their disease. And finally, while there is a need for increased convenience with dosing, we will be launching donidalorsen as an auto-injector in order to make the dosing as easy and convenient as possible. So the auto-injector is of a very small volume with an extra-fine needle in order to make the injection as painless and easy as possible for these patients.

That's actually very helpful, too. Even with the onset of the new oral therapies, I think uptake of an auto-injector should be pretty strong if you deliver the efficacy you're talking about. So that's good. And you touched upon some of this already, but with regard to the current market, but in your discussions with your colleagues in the drug development industry as well as physicians in the area, how do you see the actual market evolving? Do you see it continuing to grow as new products are approved and both physician and patient awareness of HAE continues to grow?

Right. So as you know, HAE is a surprisingly large market. It's currently at $2.5 billion [ that relates ] to last year was $2.5 billion, and it's continued -- expected to continue to increase. So we expect to be about $4 billion by 2025, especially driven by growth in new prophylactic treatments. Overall prophylactic use now is about 60% to 70% of the HAE market and it's continued -- expected to continue to increase. So the launch of multiple acute and long-term prophylactic treatments has increased awareness of HAE diagnosis and approved referrals for HAE patients, who are more quickly starting prophylactic therapy. So I think the rates of diagnosis in the U.S. are dramatically increased. I think the rate of diagnosis in the rest of the world still have to catch up. For example, it's been estimated that there may be 60,000 HAE patients that live in Asia, most of whom were undiagnosed. For example, there's only 300 diagnosed HAE patients in Japan, even though the rate of HAE seems to be pretty constant across countries and ethnicities. So I think there's a lot of opportunity for continued growth of the market.

That's a pretty dramatic number, you just threw out there around Asia. So how would a company like Ionis look to address that?

Yes. So while the U.S. market, of course, is the major market. It represents about 70% of the global market. Ex U.S. sales are expanding, especially with greater acceptance and use of novel prophylactic therapies. So we expect to provide our drugs to patients globally and will, of course, prepare accordingly. As with all of our programs, we look with a global perspective, and we'll likely look to partner to launch the drug in ex U.S. markets.

Got it. And even from a pricing standpoint and in ex U.S., it seems that the pressures are not that high. One of the panels earlier on, the physician said, he has to do a lot more paperwork for an asthma inhaler than he does for an HAE drug [indiscernible] reimbursed or what have you. So you anticipate that trend to continue on assuming.

I do. And yes, the biologics and asthma are another story.

That's true. So no, so that's great. I mean you definitely addressed my last question. I was just going to talk about the needs for by both physicians and patients for prophylaxis and what they want to see in that. So I think you really addressed that already. So I guess maybe just to wrap up, what investors should be looking for? I mean, you talked about the Phase III data obviously coming up in 2024, but anything else we need to look for, from Ionis and for the HAE program.

Yes. I think the key thing is looking for the continued data stream that will be coming out, starting with the 1-year safety data, because people are always interested in what's the durability of effect. Yes, you had this remarkable 97% improvement, but what happens over a year and when it goes out into a sort of a real-world setting and also what happens with safety when you dose for that long. And in addition, in the 1-year data, we'll have our first public disclosure of every 8-week dosing results. So that will be very interesting for, I think, for people to look for.

Absolutely. So very helpful discussion, very good information. I really appreciate you taking part in our first annual HAE Conference, Dr. Newman, and looking forward to the data this year, especially from the real-world perspective. So thank you very much.

My pleasure. And congratulations on being able to pull together a program like this.

Thank you.