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

Good afternoon, everyone. I'm Andrew Galler, one of the biotech analysts here at Morgan Stanley. And I'm joined today by Brett Monia, CEO of Ionis Pharmaceuticals. So to start off, I'll read our disclosure statement. For important disclosures, please see the Morgan Stanley research disclosure website at www.morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative.

So Brett, I wanted to kick it off just, you've been in this role a little over 30 months now. So I want to understand how your vision for Ionis has evolved in your opinion to the company and the direction forward?

Thank you, Andrew, and thanks for the opportunity to be here today. Yes. So I'm happy to answer that question. I assumed the CEO role at Ionis in January of 2020. I'm one of the original scientists at Ionis. So I've been with the company a very long time. And obviously, the company was very successful. When I assumed the CEO role at Ionis, we accomplished a great deal. But I also recognize the fact that clearly, that Ionis could be even far more successful and bring even greater value to shareholders to all stakeholders. And I felt we needed to focus on 3 key strategic objectives. The first was the past, we -- in the past, we were focused on partnering, great R&D organization, where we would partner our assets. And I felt to really maximize value that we had to bring and deliver products to the market ourselves to be fully integrated. And that is a commitment that we made, and that's a commitment and a plan that we're executing very well now with 3 near-term commercial opportunities, eplontersen in a co-co with AstraZeneca, olezarsen for severe triglycerides and donidalorsen for HAE as our near-term commercial opportunities that we're going to bring to market. The second key objective was to advance the technology, to expand it, to diversify it. There was a time when there were really no other players in the RNA space, RNA targeted space. Today, obviously, it's a highly competitive and successful space. And I felt we had to expand our capabilities with RNA-targeted therapeutics. We've done that really well. To expand our capabilities in targeted delivery, new LICAs, outside the liver, liver has been a great -- like a strategy for us, but we need to go outside of that. And also to potentially even invest in new platforms to diversify our drug discovery capabilities. And we're making great progress along all those areas. New products are marching towards drug development, opening up new tissues, new -- with new LICAs, new backbone chemistries and the like. And we're really making great progress as I said. And then the final was well to deliver the goods, to deliver transformational medicines to the market, to win on the market, to be successful commercially and to do so in a sustainable manner time, over time, over time. And we're right on the path to achieving that. This year alone, we have positive Phase III results for eplontersen and TTR polyneuropathy. We're expecting to launch that drug next year. We potentially launch next year with Biogen tofersen for SOD1-ALS. And today, we have 6 and 8 Phase III indications and all of them are progressing well. We've also had a steady stream of Phase II positive readouts this year alone that are setting us up for additional Phase III starts next year that we think is going to go really -- is going a really long way in achieving that third objective in delivering a sustainable continuous supply of new drugs to reach the market for years to come. So we're hitting on all cylinders. And this has been a great year for Ionis, and I think next year and the years to come are going to be even better.

Absolutely. So I think one criticism of the company in the past was that you were a bit too unfocused as far as therapeutic areas. So how are you thinking about that going forward? I know that you've been investing more in CV and neurology. So should we expect that to be a trend continuing going forward?

Yes, absolutely. We do have a really big pipeline. And sometimes, we can be thought of as being a little spread out, not focused. But one of the things myself and my management team has really spent a lot of attention on is to focus our drug discovery in our pipeline. Cardiovascular is clearly a leading franchise for us. It's really focused on liver-derived targets that can promote cardiovascular disease in various different ways, thrombosis or heart failure, hypertension, all of these, and severe elevated triglycerides. And that is -- will be a mainstay. And we're expecting to build on that with new LICAs that are opening up muscle and skeletal tissue as well in heart failure, and we'll continue there. Neurology is the second major area franchise that will -- we're having great success with, SPINRAZA, of course, is a great success. It's the only multi-billion dollar product for an RNA-targeted therapy, at least that I'm aware of, in ever. And we're building on that with new ALS drugs and drugs for Alzheimer's and rare severe neurological disease indications as well, and all of that is coming forward. I'd also say that we will be opportunistic for severe rare diseases that make a lot of sense for us to bring forward to Phase III and bring to the market. And I think donidalorsen is a great example of that for hereditary angioedema. It doesn't fit really well in cardio, it doesn't fit really well in neurology, but it's a great opportunity. And we were really focused on donidalorsen as an example because we knew that the unmet need in hereditary angioedema still was very large. Patients wanted better drugs for thrombo -- for HAE prophylaxis. And we felt that if the drug hit the profile, we set it out to hit, we wanted to hit in Phase II that would meet all those needs. And indeed, it exceeded our -- all of our hopes in Phase II development. So it made sense for us to bring it forward. So we will be opportunistic. We will also trim areas where we don't think our platform works the best. One of the things that I did when I became the CEO was I deprioritized oncology, for example. Oncology is a very expensive investment. Our drugs don't work necessarily best in cancer. And we've essentially shut down oncology drug development and partnered out those assets, and we'll continue to focus as we go forward.

Great. Can you provide time lines around some of those new LICAs that you are advancing in the clinic?

Yes. Sure. So I think we're all -- everybody recognizes the fact that hepatocyte liver LICA has been a transformational event for the platform. It allows us to dose very low, very low doses with excellent safety, tolerability, convenience of monthly or even less frequent dosing subcu low volume. And based on that success, we wanted to build off of that to develop and discover new LICAs for other tissues that have the same profile. Our most advanced program is in targeting muscle, LICA skeletal muscle and cardiac myocytes, neuromuscular diseases and heart failure as examples. We have an internal effort, we also have a very, very productive partnership with Bicycle Therapeutics that we launched last year to develop new LICAs targeting the transferrin 1 receptor to open up the muscle tissue and it's working great. We expect our first muscle LICA to reach development that is it will be manufactured moving to tox studies by the end of the year, at least one potentially others. And then based on -- following the tox studies, we'll move into clinical development. So it's coming rapidly. We have LICA for pancreas as well the beta cells, which will probably be a year behind the muscle LICA, but we've already achieved excellent preclinical success in non-human primates, rodents and other species that could potentially open up indications in the pancreas. And then we have other efforts too earlier on, but new LICAs are coming forward. But we see our first LICA outside the liver to reach development by the end of the year.

Great. And then if you can talk about another chemistry modification, MsPA, what's the main value proposition in integrating that into your ASOs?

So MsPA, the mesyl backbone modification is a modification that allows us to replace the long-standing backbone, phosphorothioate DNA. Phosphorothioate DNA is a great backbone chemistry, but it also has 2 flaws, if you will. One is at high doses, it can produce proinflammatory effects, right, off-target effects. The second is, it is a site of susceptibility for degradation. So it causes your drugs -- although our drugs with LICA is, for example, are very durable, it limits the durability. So it limits us from going to biannual, for example. The mesyl MsPA backbone solves both of those problems. By removing the phosphorothioate, it reduces -- greatly reduces the proinflammatory effects. Proinflammatory effects aren't a problem for systemic LICA medicines because the doses are so low. But in other areas where you're delivering directly to a tissue and concentrations could get high because it's local delivery like in the lung that are very sensitive to proinflammatory effects, we're finding that the mesyl backbone is greatly improving the proinflammatory profile in the lung for pulmonary delivery as an example, and we think that, that could be -- that could reactivate our pulmonary drug discovery program in the future. And then in addition to durability, and I would add that the durability improvements that we're seeing with systemic molecules that are incorporating the MsPA backbone are actually translating to increased durability, not only in ASOs, but also in siRNA molecules. And we're developing both platforms, SIs as well as ASOs with MsPA and with other LICAs as well.

Great. And so you mentioned that you're working on siRNAs. What's the latest on that for time lines? And then how would you decide whether to go with an ASO or siRNA for a certain indication?

One of the -- when I mentioned earlier that one of my strategic objectives for the company was to really expand the scope of our drug discovery capabilities for RNA-targeted therapeutics and really that's what I was talking about was I didn't see why we should limit ourselves to single-stranded ASOs when double-stranded ASOs are so similar, the way they work, how they're made, how we manufacture them, their metabolism, how they're metabolized and so on. And we have the -- we have premier medicinal chemistry manufacturing, pharmacokinetic group in the world for oligonucleotides. So the strategy here was made the best drug win. There will be applications where SIs just don't make no sense. We won't even pursue them. SPINRAZA is a great example of that, right? Splice-switching, splice-skipping or -- will not work with siRNA. And we have programs in splicing that we wouldn't even pursue in SI. It makes no sense. There are other applications where we're seeing the durability that siRNA offers from -- when administered systemically, it could be an advantage. And we're looking at that as follow-on programs as well as new drug discovery programs. And then there are other local applications where we're just seeing better activity with ASOs versus SI right now in the CNS, for example. We're seeing better profile for ASOs there. So we -- our philosophy is if it makes sense to pursue both made the best drug win. I believe that by the end of this year, we will have moved our first SI into development. which will probably be a LICA for muscle targeting, where we're seeing a better profile versus the ASO LICA.

Yes, absolutely. And then I think a major trend we're seeing right now in nucleic acid therapeutics is a shift to targeting more prevalent diseases, i.e., hypertension with angiotensinogen. So what potential competitive advantage do you think ASOs could have here?

Well, the competitive advantages that ASOs have for more prevalent diseases are really based on the growing evidence that they can be safe and effective in large populations. All platforms start -- virtually all platforms start by working through small indications first, rare indications. And then as you fine-tune the profile of your medicine, right, reducing off-target effects, enhancing potency, enhancing durability, because durability is important because these chronic large indications are demand convenience. Once you really refine that, then you start moving into the more prevalent indications, and that's exactly where we are. In fact, we've been moving into this now for the last few years. Examples of that are our Factor XI thrombosis program, prophylaxis for prevention of thrombosis, very large indication. Positive Phase IIb data readout happened this year. This is a ready for Phase III asset for thromboprophylaxis, pelacarsen for LP(a)-driven cardiovascular diseases, a disease indication that's estimated to be 8 million to 10 million people globally is now in an outcome trial with our partner, cardiovascular outcome trial with our partner, Novartis, in which more than 8,000 patients have completed enrollment with excellent safety and tolerability. Another example, I'll stop here, is there are others is our angiotensinogen program for refractory hypertension, primary care, who had ever thought we'd move into primary care. This is for refractory hypertension, millions and millions of people suffer from this, and that drug is now in Phase IIb, which will read out by the end of this year. So we're there. We've moved into large indications, and we're doing really well in rare indications as well.

Absolutely. So now maybe we can move to the transthyretin franchise. So you recently had data for NEURO-TTRansform. And I wonder, as people think about comparing that to the data sets for Amvuttra and Onpattro, it looks like you have modestly lower TTR knockdown. And given there's a correlation between TTR knockdown and outcomes, do you think that people might worry that you're slightly less efficacious?

I can't comment on what might make people worry or not. What I can tell you is that actually the TTR reductions we're seeing at our interim analysis of 8 months is essentially identical to the results of our competitor for TTR lowering at their interim results for 9 months, if you really carefully look at the graphs. And I really won't go any further than that at this point. The reductions are essentially the same. And we do know that the better lowering of TTR, you get the better efficacy you get, we saw that with TEGSEDI and eplontersen. Our eplontersen is showing substantially greater efficacy than our predecessor, TEGSEDI, and that's based on greater TTR lowering. TEGSEDI, we got about 70%. We're getting now north of 80%. And the TTR lowering that we're getting with eplontersen is continuing to go down. And remember, this study is continuing for another 7 months after the interim analysis. So if continued TTR lowering will translate to even greater efficacy, that's great. We don't know if there's a ceiling where further reductions are not going to help you anymore, but we're going to find that out. We're very pleased with the TTR reductions we get. We're very pleased with these numbers of patients that are actually improving compared to their entry values, right? So their entry mNIS+7 value, their entry Norfolk quality of life values, we're seeing patients do better or actually, their numbers are actually improved compared to their entry levels in a lot of the patients. This is a very competitive formidable competitor in this space, which is a enormous market opportunity, TTR amyloidosis.

Great. And then moving now to maybe to Cardio-TTR Transform. Can you just maybe walk us through again the rationale for upside in that trial, given you're using cardiovascular outcomes?

Yes. So we increased the -- our sample size from, I think it was 750 patients, cardiovascular outcome trial from 750 to 1,000, approximately 1,000 patients and extended it from 120 weeks to 140 weeks. And we did that for several reasons. First and probably the most important, this disease is -- the awareness for TTR cardiomyopathy has increased immensely over the last few years, thanks to tafamidis and make -- and having a drug available and making physicians and patients aware of this disease such that diagnosis is happening earlier. In addition, new technology is diagnosing the disease better imaging, scintigraphy is a better way to actually diagnose patients earlier. As a consequence, to actually collect outcome data, cardiovascular hospitalizations or deaths, you need to go longer or -- and/or you need a bigger sample size to collect all the events to actually demonstrate and achieve the cardiovascular risk reduction that you want to achieve, so you have a great drug for the market. Diagnosis happening earlier, the ATTR-ACT data that tafamidis was built on is no longer really the benchmark with respect to patient demographics. Those patients were much sicker than all of the trials today. And we're seeing that in all the trials that have been coming out lately, patients are being diagnosed early. So it's really to ensure that we have the most successful outcome in the cardiovascular outcome trial possible. We have the richest data set and the study is successful. In addition, excuse me, we also wanted to increase the number of hereditary patients in this study. And we also wanted to manage the amount of patients that are on tafamidis versus naive to tafamidis, not on tafamidis. And that's very important because we want to be able to make claims of how good our drug is on top of tafamidis versus how good our drug is naive. And having a bigger sample size allows us to be able to pull those levers to make sure we have a good balance between the 2 groups. So it's really, at the end of the day, it's ensuring for the most successful outcome possible in a rapidly evolving demographic patient population and also having the rich data set to succeed on the market.

Absolutely. So fast forward 3 years to 5 years, and we assume that Amvuttra, Onpattro, and eplontersen, all make it to market in cardiomyopathy. Besides having this rich data set, what else do you view as a source of potential commercial differentiation?

Well, the design of the cardio -- I think there's a few things. The design of the cardio -- well, let me back up a little bit, if I could. This is a very large market, a very large market that is growing in appreciation for how big it potentially will become in the future. We believe that the data supports that the silencer mechanism of action will be the superior mechanism for efficacy for really improving the lives for patients for cardiomyopathy and neuropathy. And I think the data supports that conclusion certainly in neuropathy so far. In addition, there's really are not a lot of players in the RNA silencing space. There's us and there's one other competitor. So a lot of room for play here. I already touched on the design of our cardiomyopathy study -- excuse me. It is the biggest, the richest outcome trial ever conducted. And we think that, that will result in a richest data set, which will really inform physicians and patients. In addition, our drug is a self-administered at-home auto-injector, which we think is a big advantage for our program. And in addition, we're pleased to have AstraZeneca as our commercial partner, who is a powerhouse commercial organization that is delivering cardiovascular commercial products to patients globally. And we think that that's a big advantage to maximize the value because this is a global disease. And having the strength of a partner like AstraZeneca, we think this also represents a big advantage.

Great. I think it ties up all our questions on the TTR franchise. So let's move now on another one of your near-term pivotal read-outs, the OASIS-HAE study for donidalorsen. I guess in the original Phase II data set, we saw a pretty rapid and sustained reduction in attacks. So what are we hoping to see in the OASIS-HAE study? And then what are we hoping to confirm with this design?

Yes. So donidalorsen really showed a best-in-class prophylactic profile, prevention profile for hereditary angioedema attacks in a Phase II. The data that will be coming out in the OASIS Plus later this year is really to show the durability of that protection long term, right? So these will be patients that have been treated for donidalorsen that rolled over in the Phase II study, and these are the open-label extension are being treated for at least a year. And the objective there is to show that the potential best-in-class profile for donidalorsen in preventing hereditary angioedema attacks is durable. It's going to last for up to a year at least. And in addition, in that study, we're looking at bimonthly dosing as well in the open-label extension. And we'll look to be able to see if bimonthly dosing is potentially as good as the monthly dosing in preventing attacks. We're looking in Phase III of both bimonthly and in monthly dosing. So it will be very informative. The data will come out in the second half of this year.

Absolutely. And then just beyond the efficacy data, do you see any other, I guess, unmet need with standard of care given how well entrenched Takeda's products are?

Absolutely. Patients are looking for several improvements in the prophylactic treatment of HAE. One is on efficacy, preventing attacks. The second is on convenience, right? The drugs that are out there today are either administered subcutaneously for prophylactic treatment every 2 weeks or every 4 weeks, but the administration route can be painful and patients really don't tolerate it very well. The other is an oral drug where the efficacy isn't really as good as what we're seeing with other drugs in this space. Our drug offers the potential of preventing HAE attacks at a level that has been unprecedented to date, if we can replicate that in Phase III. The convenience of monthly administration with a small -- with a low-volume auto-injector self-administered or even bimonthly dosing with an excellent tolerability profile. So we're looking at tolerability, we're looking at efficacy and we're looking at convenience as an advantage.

Absolutely. And then fesomersen, your Factor XI [indiscernible], so recently top line for ESRD patients on hemodialysis. Your partner announced -- your partner, Bayer announced that. So how should we think about expectations for that data set relative to the Factor XIa mAbs and then also potentially orals if you expand beyond ESRD?

Yes. The Factor XI is a exciting program for prevention of thrombosis. It really is the future of thromboprophylaxis treatment, we believe and others believe. Fesomersen, we put out top line data for Phase IIb in end-stage renal disease patients. The advantage and the opportunity for Factor XI is to prevent thrombosis from recurring is particularly in patients that are at risk for bleeding, right? It's a target that can prevent thrombosis from happening and really has a very low risk of bleeding. Our Phase IIb data was intended to demonstrate that patients indeed who are at high risk for bleeding didn't bleed, and that's in the end-stage renal disease population. These patients are at high risk for thrombosis, they're at high risk for bleeding. And we showed that despite inhibiting Factor XI in the mid-80% range, the high reductions in Factor XI, these patients were not at a higher risk for bleeding compared to controls. In addition, there were some evidence that patients were also -- we were also reducing thrombosis risk in that study, although it wasn't powered for that. In fact, none of the Phase II studies that have been using Factor XI strategies have been powered to show efficacy in Phase II today, and that includes monoclonal antibodies or small molecules that's really going to have to be generated in Phase III. The -- really, the Phase II was target inhibition and demonstrating that the patients that is safe from a bleeding perspective. So we're looking forward to the full Phase IIb data readout for fesomersen at a medical meeting in the second half of this year, but this is really a ready for Phase III asset.

Absolutely. So if your partner, Bayer took forward their Factor XI mAb instead in ESRD, are you committed to taking this program forward alone?

Yes, Andrew, you touched on focus before. And one of the things we really need to do is to focus our -- the products that we bring to the market ourselves and also manage the expenses that will be associated with Phase III development. We're running the Phase III program for eplontersen, olezarsen, donidalorsen, this is a big investment. This is a big Phase III investment. We will -- if the program came back to us, we would probably look to repartner it quite honestly. And so we could focus on our near-term commercial opportunities and to really take care of our finances.

Absolutely. And then we also have the GOLDEN readout for your Factor BA, so in geographic atrophy. I think people might be a little wary of this mechanism, given lampalizumab, which targeted Factor D directly downstream of Factor B failed it very publicly.

Yes.

So how are the latest thinking about alternative pathway activation of driving your rationale for the program?

So we have -- we're developing our Factor B LICA for 2 indications with Roche. One is for IgA nephropathy, which read out in Phase II and was very successful, and they're moving it to Phase III development next year based on a very compelling profile in those patients. The geographic atrophy study is enrolling, the GOLDEN study, it's enrolling nicely. But it's different than the lampa studies, which really used the monoclonal antibody that was intravitreally dosed targeting Factor D, right, upstream of Factor B in the alternative pathway. Factor B actually has genetic linkages to people that are deficient, and Factor B have a higher propensity to not develop AMD, geographic atrophy. So there's a genetic linkage. And we think that Factor B is actually a better target based on its role in the alternative pathway as being downstream from Factor D. The other advantage for Factor B is the fact that we are administering the drug systemically, subcutaneously. And there really is compelling evidence that systemic complement, not just local complement in the eye is actually playing a major role, if not a dominant role in promoting complement-mediated promotion of geographic atrophy. So we think we have a better target, and we have a better route of administration for our Factor B drug for geographic atrophy.

Great. Well, I see we're out of time. So Brett, thank you again so much for joining us today.

Thank you, Andrew. Appreciate it.