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 the conference today with Ionis. A little different format this year than in years past. So no switching rooms for Q&A. We're going to stay right in here. If you have a question, you can raise your hand, somebody will run over to you with a microphone. Or alternatively, you can submit questions electronically and I'll read them off the iPad up here. So with that out of the way, let me turn it over to Ionis CEO, Brett Monia.

Thank you very much, Jess. Good morning, everybody. I'm really pleased to provide you with an update on the great progress we're making at Ionis. So these are my forward-looking statements that I recommend for you to review at your convenience. 3 years ago, when I became the CEO of Ionis, I laid out 4 strategic priorities for Ionis to bring Ionis to even greater success, to maximize the success for Ionis, for our shareholders, for all stakeholders. And there's 4 of these key strategic priorities. The first is to deliver an abundance of genetic medicines to the market in a sustainable manner. The second is to fully integrate Ionis that is to build a commercial organization and bring commercial products to the market, a commercial organization of excellence to match the excellence we've had for decades in research and in development. Thirdly is to expand and diversify our reach in technology to expand the scope of our drug discovery capabilities and fourthly, to build on an already strong financial position to enable Ionis to be able to make all the strategic investments we need to make to bring us to even greater success. I'm very pleased to say that we've made tremendous progress against all 4 of these goals over the last couple or 3 years. And 2022 was a particularly successful year, a pivotal year for Ionis where we've made tremendous progress. Starting first with the delivery of an abundance of genetic medicines to the market. The Ionis' near-term commercial pipeline is advancing extremely well. Last year, we were very proud to have delivered positive Phase III data for eplontersen in an indication called TTR amyloidosis with polyneuropathy. And we submitted the NDA and the NDA is now under review by the FDA based on that data. We strengthened the Phase III CARDIO-TTRansform study for patients with TTR cardiomyopathy in the eplontersen program. We also completed enrollment in the olezarsen Phase III FCS study with data expected this year, and we delivered additional positive data for the Ionis' near-term commercial medicine, donidalorsen for hereditary angioedema, additional Phase II open-label extension data. And the rest of our pipeline has performed exceptionally well. Pipeline that are being driven through partnerships. We're very proud of the fact that tofersen for SOD1 ALS is now under priority review with the FDA and is also under review in Europe for potential approval this year. And we had a great year with pipeline performance. We had many positive pipeline readout from our Phase II and Phase III pipeline, setting us up very well for additional Phase III starts in the near term, including 2 that are expected this year. And we completed -- or I should say, our partner Novartis completed enrollment in the pelacarsen Phase III study in patients, a cardiovascular outcome trial called Horizon in patients with Lp(a)-driven cardiovascular disease. That study -- that drug is on track for data readout in 2025. We also are now a fully integrated biotech company, and we're very proud of that. In 3 years, we've gone from an R&D organization to full integration. We've built an excellent commercial organization. We've laid out our commercial strategy and our near-term priorities. Our core capabilities are in place. We're preparing to launch eplontersen, olezarsen and donidalorsen in the near term. Our third objective, technology, great strides in expanding and diversifying our platform capabilities in genetic medicine. We're very proud of the new partnership we did and announced last year in DNA editing, a strategic partnership with Metagenomi, and we've advanced other chemistries to further expand the profile -- the optimal profile for the medicines we bring forward, including advancing a follow-on molecule to SPINRAZA with our partner Biogen, that we think could get us to annual intrathecal dosing for SMA. And lastly, our fourth objective, financial. We made great strides in building out our -- and strengthened our already strong financial position. This week, we're very proud to have announced a very important and strategic partnership with Royalty Pharma to monetize a portion of the pelacarsen and SPINRAZA royalties to further enable our objectives. And last year, we announced a sale leaseback transaction that also brought in important cash into the organization to support our goals. These are our 3 near-term commercial opportunities for Ionis from the Ionis pipeline, eplontersen, olezarsen and donidalorsen. Eplontersen is being developed for 2 specific indications that are related to TTR amyloidosis, a rare population referred to as polyneuropathy in a much broader indication, patients suffering from TTR cardiomyopathy. Based on the profile that we've generated to date for eplontersen, we strongly believe that this is a highly competitive product in this highly lucrative, but competitive markets. We expect first approval this year for the polyneuropathy indication. Olezarsen, our second Ionis' near-term commercial opportunity is being developed for patients suffering from severely elevated triglycerides. Olezarsen has the potential to be a first-in-class medicine for patients suffering from severely elevated triglyceride-related diseases. This is a very large market opportunity. Millions of people suffer from diseases related to severely elevated triglycerides in the U.S. alone, a blockbuster market opportunity. And then our third opportunity or near-term Ionis commercial opportunity is donidalorsen, our medicine to treat prophylactically hereditary angioedema, a rare genetic disease based on the profile we've generated to date, donidalorsen has the potential to be a best-in-class prophylactic treatment for HAE with a very attractive market opportunity for Ionis. So now I'd like to do a deeper dive into these 3 near-term Ionis commercial products, starting with eplontersen for TTR amyloidosis. This is a big market opportunity. Eplontersen is emerging as a highly competitive, highly attractive medicine for TTR amyloidosis that has the potential to change the standard of care for this disease. We're targeting 2 indications: a rare genetic indication referred to as TTR polyneuropathy and then a much broader opportunity, hundreds of thousands of patients suffering from TTR cardiomyopathy that both can have a genetic component to it as well as a nongenetic component to it. We are developing and will commercialize eplontersen in a co-commercialization partnership with our long-standing strategic partner, AstraZeneca. This is a complementary relationship partnership that we believe will bring eplontersen to as many patients as possible in the market to win and be successful in a highly competitive and lucrative market. Ionis brings with it its expertise in RNA therapeutics and in TTR amyloidosis. And of course, AstraZeneca brings with it its vast global scale experience and strength in commercializing transformational medicines on the market, especially cardiovascular products. We're very thrilled with the Phase III interim analysis data that we reported last September at the ISA meeting. We demonstrated in poly neuro -- in the neuro transform study in patients with TTR polyneuropathy robust and sustained reductions in TTR levels over time with highly statistically significant, clinically meaningful benefit in neurological disease, neuropathy progression as well as improvements in quality of life of a substantial number of patients who were actually improving in this study compared to their baseline entry values, all with a highly favorable safety and tolerability profile. So eplontersen is being developed in a comprehensive Phase III program. I just highlighted the neuro transform study, the interim Phase III data as well as the fact that we have now submitted the NDA for potential approval this year. We're looking forward to sharing the full data set when the study completes later this year, the full week 66 and week 35 data. And we have the potential to file regulatory filings based on that data outside the U.S. this year as well. The CARDIO-TTRansform study in patients with TTR cardiomyopathy is proceeding on track very well. It is the most comprehensive study ever conducted for an investigational medicine for TTR cardiomyopathy. And with that comprehensive structure of that Phase III program, we expect to have the most robust, most competitive profile for eplontersen in this patient population. We expect to complete enrollment soon possibly the first half of this year, and we're on track for data in 2025. And we have several profile enhancing studies to further provide the most competitive profile as possible for eplontersen at the time when we reach the market. Our second near-term commercial opportunity is olezarsen, next near-term commercial opportunity for Ionis. Again, olezarsen is being developed to treat diseases related to severely elevated triglycerides. It's well recognized that there's a great unmet medical need for better treatments for patients suffering from severely elevated triglycerides as these patients are at high risk for all kinds of abnormalities, especially potentially fatal pancreatitis. We are targeting 2 indications with olezarsen today, a rare genetic indication referred to as FCS and a broad indication referred to as severe hypertriglyceridemia or SHTG. One is genetic, FCS. One is there is no known genetic cause, SHTG, but these patients suffer the same way at risk for severe and potentially fatal pancreatitis and all kinds of metabolic abnormalities. And again, this is a blockbuster market potential for Ionis. We have high confidence that olezarsen will deliver when the Phase III study read out, and that's based in part on quite a bit of positive clinical data in earlier development studies. We have demonstrated, for example, in Phase II in patients with elevated triglycerides, substantial reductions in the target APOC3 and substantial reductions in triglycerides, 60% reductions in triglycerides in this patient population at the Phase III dose of 50 milligrams per month, all with an attractive safety and tolerability profile. In Phase III, we will be -- as I said, we're going to be looking at -- we are looking at the 50-milligram per month dose. We're also looking at a higher dose, 80 milligrams per month and the fact that we are targeting patients with even higher triglycerides gives us confidence that we're actually going to achieve even greater triglyceride reductions once the Phase III studies read out. Our plan to bring olezarsen the market, it's pretty straightforward. The FCS study will read out first, and that will be our first market target opportunity. Soon thereafter, a year, 1.5 years later, we expect the SHTG study to read out, which is, of course, the nongenetic broader population with high triglycerides. These indications alone represent a $1 billion plus market opportunity in the U.S. alone. We will continue to develop the market as olezarsen emerges into the marketplace. And we see significant upside even beyond that population for other patients that have milder triglyceride elevations, but are still at risk for pancreatitis and cardiovascular disease. So this is further market upside for olezarsen. The Phase III study for olezarsen is comprehensive. The FCS BALANCE study is, we completed enrollment last year, and it's due to read out in the second half of this year, and we're preparing to launch olezarsen for FCS now. There are 2 pivotal studies for SHTG CORE and CORE 2, those studies are enrolling well. And we also have several profile enhancing studies including the ESSENCE study itself, which is a study to round out the safety database necessary in patients with elevated triglycerides that is necessary for registration. And then our third near-term Ionis commercial opportunity is donidalorsen. donidalorsen is positioned as a best-in-class prophylactic treatment for hereditary angioedema. HAE is a rare genetic severe disease that's caused by a mutation in a gene called C1 inhibitor. That mutation results in hyperactivity -- overactivity of a pathway called the prekallikrein pathway causing severe and unpredictable angioedema swelling events that can be fatal to patients, certainly disfiguring and as I said, potentially fatal. This is an attractive market opportunity and our drug is donidalorsen that is targeting the root cause pathway, the prekallikrein pathway. We're very confident in the Phase III outcome for donidalorsen as well, and that's based on really impressive Phase II data and now open-label extension data, long-term extension data in patients with HAE. In our Phase II study, we demonstrated rapid and dramatic really unprecedented reductions in HAE mean attack compared to placebo, 97% reduction -- mean reduction in HAE attacks at 17 weeks. And then last year, we reported long-term extension data, which patients were treated at a minimum up to 1 year or longer in which we showed this efficacy was sustained. In short, we're seeing that patients are essentially 100% -- nearly 100% attack-free when they go on to donidalorsen for a year or longer. We also, in addition to the robust efficacy, donidalorsen offers very high and attractive convenience for patients as a self-administered subcutaneous low-volume painless injection with an auto-injector and with very attractive safety and tolerability. The Phase III study for donidalorsen is called Oasis. We're enrolling that study now, and we expect to complete enrollment this year with data next year, and we're also conducting profile enhancing studies for donidalorsen to further round out the profile to make it as competitive as possible when we reach the market, including a switch study that's ongoing now in which patients that are on commercially available prophylactic treatments for donidalorsen -- for HAE are being converted over to donidalorsen with the goal of demonstrating sustained and maybe even improved efficacy with good safety and good tolerability, very important data as we approach the market. So the near-term commercial opportunities for Ionis are all on track. They're proceeding very well, and we have many important upcoming events for these 3 drugs this year, next year and to follow. The rest of our pipeline is also performing and hitting on all cylinders, performing very well. Tofersen, with our partner Biogen for the treatment of SOD1 ALS is under priority review by the FDA with the PDUFA date of April 25 and is now under review for potential market authorization in Europe as well. Tofersen has the potential, if approved, to be the first ever disease-modifying treatment for any cause of ALS, and we're very proud of that. We also are developing ION363 for another genetic cause of ALS mutations in the FUS gene. We're enrolling well, with data expected in 2025. And with our partner, Novartis, pelacarsen is advancing in a cardiovascular outcome trial called Horizon on track. More than 8,000 patients in that study have now been enrolled. Patients living with LP(a)-driven cardiovascular disease. And we are on track. Novartis is on track for data readout in 2024-2025 time frame. So the performance of our late-stage pipeline as well as our mid-stage pipeline is setting us up for a steady cadence of new products to reach the market in the near term and in a sustainable manner. Today, we have 3 products in the market led by SPINRAZA, the foundation of care for all forms of spinal muscular atrophy, which continues to perform as a blockbuster on the market. This year, we expect 2 new products to reach the market, eplontersen, for TTR polyneuropathy and tofersen for SOD1 ALS and then next year, olezarsen for FCS. And then to follow that quickly, we're expecting to move into new products on the market for broad indications. Olezarsen, for its second indication, SHTG, eplontersen for its second indication, TTR cardiomyopathy, pelacarsen with Novartis for LP(a)-driven cardiovascular disease and also for rare diseases, such as donidalorsen in HAE. And then more to follow from our mid- and late-stage pipeline, all of this contributing to what we expect to be a substantial, sustainable revenue growth for years to come. So where I've taken -- I tried to take you up to this point now is to draw the conclusion that we are well on our way to achieving our first 2 objectives for the strategic objectives for the company, sustained delivery of genetic medicines to the market and the building of our commercial organization as we prepare to launch several products at Ionis ourselves. The third strategic objective is technology. We're very proud of the advances we've made in technology, over the last few years. We have advanced technology to have a meaningful positive impact on drugs today and in the near future as well as in the longer term. Some of the great progress we're making in technology today includes the optimization of medicinal chemistry and know-how in delivering drugs for the CNS technologies and approaches that are now allowing us to dose our drugs for neurodegenerative diseases and neurodevelopmental diseases every 3 months, every 6 months and potentially even annually. New chemistries opening up new organ systems such as muscle, targeted delivery to muscle and new backbone chemistries. And then in the longer term, great strides, great progress being made in solving other challenges, such as delivering our drugs systemically to cross and successfully cross the blood-brain barrier for CNS applications, new LICA-targeted delivery strategies through our partnership with Bicycle Therapeutics, new routes of delivery, and very excitingly and importantly, expansion into a new area of genetic medicine DNA editing through our strategic partnership with Metagenome. So we're well on our way to solving and tackling our third strategic imperative objective. And then fourthly, is to ensure that we are financially strong to build on a strong financial position to ensure we can make all of the investments we need to make to ensure success for all stakeholders. We took a really big step, a very successful step this week when we announced a new strategic partnership with the industry-leading royalty monetization company, Royalty Pharma. This is a very good partnership in the interest of Ionis as well as, of course, RP as well. This brought to Ionis, $500 million in cash upfront with the potential to achieve an additional $625 million in regulatory milestones and commercial milestones as pelacarsen moves through -- is approved and moved through commercialization. And these are milestones that we readily believe are achievable. This investment enables Ionis to develop and ensure that we have the right commercial organization and the pipeline continues to deliver for the Ionis-owned products as well as making investments in technology to ensure that we remain the leaders in RNA therapeutics and in genetic medicine. In exchange for these upfront and future milestones, Royalty Pharma receives a minority interest in the royalty revenues of SPINRAZA today and a minority interest in pelacarsen -- royalties for pelacarsen assuming pelacarsen is approved. We -- Ionis maintains a majority interest in these royalties and also all of the milestones that would be owed to Ionis if pelacarsen is approved from Novartis. We're very excited and very pleased with the outcome of this partnership. This obviously contributes very importantly to our capital base, allowing us with a cash position now of about $2.5 billion, allowing us to make the investments we need to make to be successful. That adds on top of multiple revenue sources that we have from commercial and development milestones, regulatory milestones from partners, again, to allow us to advance medicines, build our commercial organization, our technology and continue to deliver in a sustainable manner. 2022 is a really exciting and very highly successful year for Ionis and 2023 is shaping up to be the same. We're looking forward to several important regulatory actions that I already touched on, potential approvals for tofersen in SOD1 ALS in the U.S. and in the EU. Eplontersen for TTR polyneuropathy, potential FDA approval for the U.S. And we're looking forward to regulatory filings outside the U.S. potentially earlier this year. That's certainly what we're targeting. And then clinical achievements. We're looking forward to sharing the full data set for eplontersen in polyneuropathy, neuro transform data this year. The Phase III results for olezarsen in FCS, and we're planning to complete enrollment in 2 very important Phase III studies, the CARDIO-TTRansform study for TTR cardiomyopathy and donidalorsen in hereditary angioedema. And also, we're expecting at least 2 additional Phase III starts this year by our partners, GSK for bepirovirsen, for HBV and our IONIS-FB-LRx Phase III initiation by our partner, Roche, for IgA nephropathy. So we're making great progress at Ionis. And as we have always done and we continue to do when we make great progress, we always do things with corporate responsibility centered in our minds. We're committed to doing the right things for our patients, for our employees, for the environment and of course, our communities with innovation at our heart. We published our second annual corporate responsibility report this year, and we look forward -- and we recommend to you to take a look at that on our corporate website. So to conclude, we're making great progress at Ionis. We're well positioned for accelerated growth across the business to deliver on all 4 of our key strategic objectives. We have numerous attractive near-term product opportunities that are rapidly approaching the market. Our Phase III pipeline is growing. As I mentioned, we have 2 potential new Phase III starts already this year. Today, we have 6 medicines for 8 indications. Next -- soon we're expecting 8 medicines for 10 indications in Phase III development. This is setting us up for a sustained delivery of numerous new product opportunities for not just rare diseases but for very common broad indications. We are now a fully integrated biotech organization. We're very proud of that. And we're looking forward to launching our first Ionis products next year in a sustainable manner. And we're certainly making great strides in expanding our leadership position in genetic medicine by diversifying our platform capabilities and expanding in existing areas, all of this to realize our potential to be the leader in genetic medicine. With that, I'll stop and happy to take questions. Thank you.

Great. Thanks, Brett, for the presentation. And as a reminder, if you want to ask a question, raise your hand, and we'll bring you a mic or you can submit them electronically. So maybe we can start with your recent announcement of the deal with Royalty Pharma. I guess 2 questions there. One, why now? And two, how -- when you kind of embark on kind of discussions, how do you think about what you are kind of willing to trade for, right? How do you balance kind of what you want to keep and what you're okay kind of monetizing today?

Yes. Good questions. As I mentioned in my presentation, we're very excited and really, really thrilled with the partnership with Royalty Pharma for the deal we announced this week. The timing is right for this. We have a rich pipeline. We have been approached for I mean maybe decades, many years by potential partners wanting to be involved in monetizing some of our pipeline. It wasn't the right time then. We were an R&D organization, right? We are partnering our products. Now we're in a period in which we're launching our own products. That -- what comes with that is the need for capital, right, to build your commercial organization, to build your pipeline and so on. So it made sense now as we're in a period of investment in growth to consider monetizing some of our pipeline in pelacarsen and SPINRAZA were the ones we chose. Assuming that we were able to get the terms that made sense for Ionis, right? We wanted to maintain a majority stake in the products, especially if they were going to be SPINRAZA and pelacarsen because they have a long, long runway ahead. We wanted to have -- maintain major interest in future upside, milestones and those sort of infusion and so on. So we were able to strike the right deal that made sense for an investment to build our capabilities today in Royalty Pharma is the right partner to do this. They met our needs. They understood what we were looking for, and we were able to come to a good agreement. With respect to picking and choosing what we keep, what we partner, what we might monetize, there are no plans right now to further monetize anything in our pipeline. This transaction might get us to a position in which we no longer need to finance the organization, get us to profitability with sustainable profitability. We have a rich pipeline of drugs. One of the great advantages of having a really top notch commercial organization is to be able to have commercial influence on the drugs you bring forward into development as well as in development to decide what makes most sense for Ionis, what makes most sense to partner and when to partner those products if we do. So that's an ongoing sort of process and ongoing procedure. We are committed to bringing olezarsen into the market ourselves despite quite a bit of an inbound interest in that drug as well as donidalorsen for hereditary angioedema, and there'll be more coming after that.

Great. So you mentioned olezarsen, one of the near-term launches. I think on the slides, you kind of showed FCS as the near-term opportunity as well as SHTG above 1,000. Is that patient population going to be sort of unlocked with the initial FCS indication? Or is that sort of coming once you get the broader SHTG indication? .

So the first indication that we expect the drug olezarsen to be approved for will be genetically validated or genetically linked FCS, severely elevated triglycerides due to genetic mutations. It won't be indicated for SHTG because we won't have the data yet. There are already -- I think the opportunity for severely elevated triglycerides in nongenetic -- in the nongenetic form of the disease is already unlocked, honestly, Jess. Patients and physicians, caregivers are waiting for a drug that can manage these disease. We refer to this initial sort of tranche of patients as early adopters sometimes at Ionis. These are the patients and the caregivers that are waiting for a drug like olezarsen. Existing therapies like fibrates or fish oils just don't cut it. So I think that's unlocked. The market development that will do beyond that $1 billion market opportunity is then -- is what the commercial organization we tasked with, right, build the market. We're first to the market, further build that market, expand beyond that initial opportunity. That's where the additional work will need to be done. But that's all upside.

Okay. Switching to eplontersen. I think the full neuro transform data is coming this year. What should we expect to see when that data sets unveiled?

The full data set? We're -- the study is still in progress. We're looking to complete the study the first half of this year through week 66. And we're -- once we get the data through, we analyze the data, we're looking forward to first putting out -- getting out the top line data as soon as we can. But we're really looking forward to presenting the data at a medical meeting as quickly as we can once we have the data and assuming we can get into a Congress in time with their limitations on deadlines and those sorts of things. So look for the full data set, what do I mean by that? The full data set at week 35, week 66, the efficacy, the primary endpoint mNIS+7 Norfolk Quality of life, safety, tolerability, everything. We're very much looking forward to it. We think eplontersen really has the goods to really compete in this really broad market opportunity. And we're very much looking forward to sharing the data.