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

Good afternoon, everyone. Thanks for joining us. We're really pleased to have with us Brett Monia, CEO of Ionis. Before we start, though, I'm going to read a disclosure. We are required to make certain disclosures and public appearances about Goldman Sachs relationships with companies that we discuss. The disclosures relate to investment banking relationships, compensation received or 1% or more ownership. We are prepared to read a lot of disclosures for any issuer during the sessions upon your request. However, these disclosures are available in our most recent reports to view [ client on firm ] portals. In addition, updates to these disclosures are available by ticker on the firm's public website. Goldman Sachs agrees to host this conference on the basis that no third-party speaker will provide confidential and material nonpublic information. In addition, by attending the conference, you provide Goldman Sachs the right to rerecord or record and redistribute the conference information to use of third-party speakers do not necessarily reflect those of Goldman Sachs. So with that, Brett, very excited to have you here.

And to start here, you do have a few regulatory and late-stage programs in the clinic and multiple upcoming commercial launches. Could you just walk us through your near-term outlook here and strategy for these launches?

Sure. Happy to, Salveen, and thank you for the opportunity to be here today. So yes, we do -- we have a number of actually upcoming near-term pipeline events, regulatory -- including regulatory events and launches. Today, with the addition of 2 new Phase III studies that initiated in the first half of this year, we now have 8 drugs in Phase III development across 10 indications. And those are for rare indications and large indications. About half of those are partnered. The other half are wholly owned by Ionis today. Certainly, our upcoming near-term regulatory action that we're really looking forward to is the FDA action on eplontersen for TTR polyneuropathy. Last year, we reported interim data from week 35 from the polyneuropathy Phase III study that was highly, highly positive, very competitive, excellent safety along that really remarkable efficacy. And then in April, we reported the week 66 data from the completion of the study. Not only did the data hold, it actually showed continued improvement in which patients -- more than half of the patients were already improving compared to their baseline values. Hit both -- all 3 primary endpoints, TTR reduction, mNIS+7, Norfolk Quality of Life. And as I said, patients were actually doing better than compared to baseline values. We're looking at a PDUFA date of December of this year. And we -- in our co-commercialization, co-development partner, AstraZeneca, are preparing and ready for launch as soon as the drug is approved. So that's certainly a near-term event that we're looking forward to. We expect eplontersen to be a second product approved for our -- to add to our commercial portfolio this year alongside QALSODY, which was approved for SOD1-ALS earlier this year, and a very competitive profile for eplontersen and so we could talk more about that. Olezarsen, our Phase III asset that's in 2 indications at the rare genetic indication, FCS, and then the broad indication sHTG. These are -- this is a disease in which patients are suffering from severely elevated triglycerides. They're at high risk for acute pancreatitis as well as cardiovascular disease. The FCS Phase III data is due to read out in the second half of this year. And we're feeling very good about the likelihood for success there and the sHTG, the much larger indication. We expect Phase III data in the second half of next year. So that's coming -- both of those are coming along pretty quickly. And then our prophylactic treatment for hereditary angioedema, donidalorsen. We completed enrollment in the HAE study a few weeks ago, and we're expecting Phase III data in the first half of next year. So that's another key regulatory and data output action that we're looking forward to. And probably 1 other drug, I won't go through all 8 of our Phase III drugs, but I think it's worth highlighting pelacarsen, too. This is a partnership with Novartis. This is for a cardiovascular indication. That's due to high levels, elevated levels of a risk factor, cardiovascular risk factor called lipoprotein(a). That study is fully enrolled. It was fully enrolled last year with more than 8,000 patients in a cardiovascular outcome trial. This is a very large market opportunity, 8 million to 10 million people globally suffer from cardiovascular disease due to high LP(a) related levels. And based on our profile from Phase II, we expect not only pelacarsen to be the first to market with Novartis after this very large market, but also probably a best-in-class molecule for LP(a)-driven cardiovascular disease. So there's a lot coming from the pipeline and both regulatory as well as data readouts in the next few months.

Let's start with eplontersen in hereditary TTR polyneuropathy here, which is under review. How do you think about where this will be positioned within the landscape, given the other players out there in terms of where early adopters will come from and then how you think that will play out over time.

Yes. So eplontersen is in development for polyneuropathy -- hereditary polyneuropathy, as I mentioned and you just asked about. It's also in Phase III development for the broader indication, TTR cardiomyopathy. Regarding polyneuropathy, I think it's first -- it's very important to recognize the fact that well over 80% of patients with hereditary polyneuropathy, TTR polyneuropathy are not on treatment today. So this is a market development opportunity. This isn't a SWITCH market. Nobody owns this market. The objective will be to find these patients and get to eplontersen to as many patients as possible. And we think we have several advantages: First, we have great efficacy and great tolerability and safety from the Phase III study, a very competitive profile. Another significant advantage is the -- the mode of administration. Eplontersen is administered by the patient themselves. Self-administered using a simple, low volume painless auto-injector once per month, very convenient and very easy for the patients to use. It does not have to be administered by a healthcare provider or any complicated setting like that. So this is a key differentiator from the competition that's out there today. In addition, we, of course, have a very complementary relationship with AstraZeneca. We know TTR amyloidosis very well from our earlier generation work with inotersen. We know this space, we know the KOLs, we know the communities. And AstraZeneca brings within global commercial strength to reach many patients as possible. And as I said, this is a market development opportunity. So finding those patients, not just in the United States but globally, we think AstraZeneca brings great value there. So that's -- this is very competitive drug, and it's a drug that we think will do very well in the market once we get there.

You spoke to the share of the market currently taken by the existing players. Why do you think that it's not a greater amount. What were the hurdles been to adoption here?

Diagnosis. These patients, you would think that since this is a progressive potential -- ultimately fatal form of polyneuropathy that all these patients would present in the same setting, a neurology setting, neurologists. That's not the case. In fact, even in the neurologist office, this disease is often misdiagnosed for some other causes of polyneuropathy, like CMT or other things, this diagnosis in the neurology office is still poor. But these patients suffer from all kinds of problems. They suffer from heart disease. Sometimes they present in the cardiology office and the disease is not understood there. They can present in a nephrology office because of a renal involvement, or GI, these patients have severe GI problems. They go to GI docs. Diagnosis is the biggest challenge today. The patients generally go years before they're properly diagnosed and then can be put on to the therapy. So that's our goal. That's our challenge, is to find these patients and build this market out.

And how does the out-of-pocket or kind of reimbursement dynamic play out for your asset versus the others?

We think this bodes very well for eplontersen. So the, Inflation Reduction Act, got -- in our opinion, it got a lot of things wrong for -- mainly is -- it's really going to -- we think it could potentially hinder the rapid development of drugs, novel drugs for multiple indications. But one thing it did get right was the elimination of the donut hole, if you will, the loophole in which patients that are on Part D drugs had very high out-of-pocket expenses that they had to pay. That was eliminated by the IRA now. And in fact, for Part D drugs like eplontersen, which are self-administered by the patient themselves, they don't have to go to a healthcare provider. The maximum out-of-pocket expenses annually is $2,000 in totality for the disease, not just for 1 drug, but in totality, easily manageable, well over tenfold reduction in our profit expenses. So this, coupled with the at-home administration, we think represents a significant path forward advantage for eplontersen.

So moving over to your CARDIO-TTRansform, TTR cardiomyopathy study here. Remind us on your confidence in trial design and treatment effect in the context of kind of the modern patient population and what you've seen play out. And if with other programs.

Yes. This is a very important question. This is a very important aspect of our trial design. We think we have the right trial design for this very large patient population. TTR amyloidosis in totality is estimated to be a market opportunity that's greater than $10 billion, driven, of course, most by the cardiomyopathy, broad indication of the 500,000 patients are estimated globally. When we first started designed our Phase III trial, the CARDIO-TTRansform study as well as everyone else that is evaluating investigational medicines for TTR cardiomyopathy today. The powering assumptions were all based on the Pfizer tafamidis or ATTR-ACT study, right? At that time, very little was known about TTR cardiopathy. Patients were being diagnosed, but sick for a long in their disease. And obviously, the powering assumptions are very different for a disease that's in which patients are presenting with very severe disease versus a setting in which patients are presenting with milder disease. Well, thanks to the great work Pfizer has done in building out this market, better diagnostic techniques for diagnosing this disease, that patient awareness, patients are actually being diagnosed much earlier on in their disease -- milder disease in general. Well, we responded to that, we upsized our study to make it really a landmark study, the largest study by far, ever done TTR cardiomyopathy, 1,400-plus patients, when we complete enrollment, we expect to complete enrollment very soon in this cardiovascular outcome trial. So our powering assumptions are based on today's demographics, not yesterday's demographics that were based on the ATTR-ACT study. And we think this not only gives us much higher probability for a successful study but also a much better opportunity to have the richest data set to compete in this market. In addition in our study, we're going to have a very large subset of patients in which we're evaluating eplontersen's benefit on top of tafamidis as well as eplontersen as a monotherapy. We believe that this is a big advantage for the cardiomyopathy indication because cardiologists are treating a lot of -- most of the patients are on tafamidis today, certainly in the United States and in certain countries outside the United States. So tafamidis is a safe drug. It provides benefit. There's a lot of room for improvement. It does provide benefit. Cardiologists are going to want to know what data do you have that your drug on top of tafamidis is going to add benefit -- provide further benefit. And we believe that we're going to be the only ones that really have that data because of the size of the study and the design of our study. Based on the size of the study, we are also going to have a very significant percentage of patients with hereditary TTR cardiomyopathy as well, which is important because these patients actually progress faster. They have severe disease than the wild-type patients based on the rate at which they progress. And in fact, tafamidis had demonstrated better benefit, higher benefit in the hereditary population versus the wild type. Both were -- both received benefit, but hereditaries were -- we did better. So this -- these advantages in our trial design, coupled with our co-commercialization partner, AstraZeneca, who is a leader in commercialization of heart failure drugs globally. Really, we think all of this represents a very significant advantages for eplontersen to reach this as many patients as possible globally for this very, very large market opportunity.

Is there a target for tafamidis naive versus experienced patients or hereditary versus wild-type patients?

For tafamidis versus naive, we're targeting around equal amounts, 50% tafamidis patients and about 50% non-tafamidis patients. I'm pleased to say that we're just about there. It's really -- we've done -- the team has done a great job at Ionis and prioritizing sites where tafamidis is not readily available to maximum -- to increase the amount of patients that are naive, not on tafamidis so we're just about equal, 50-50. And on the hereditary side, we haven't stated what percentage there, but our goal is to have about the same percentage of patients that have hereditary cardiomyopathy that Pfizer did the ATTR-ACT study and we're getting there.

Is there the ability to make changes if need be? Or could there be learnings that play out from BridgeBio? And if not, let's just say you're very confident in the overall situation is everything on track for first half '25?

Yes. We don't see the need to make any additional changes to the CARDIO-TTRansform study. We think we got the right study, the right demographics. Like I said, we're coming close to completing and rolling. We have quite a number of patients already rolled over into the open-label extension, really good safety, tolerability. And no, we don't see any need to make any changes as far as readouts from ongoing studies like BridgeBio, you asked about specifically, it's a much smaller study, Salveen. I think it's estimated to be 500 patients. So based on what I just said on the changing demographics in TTR cardiomyopathy, we think it's going to be a challenge to show a positive outcome in that study. We think if the demographics are what we think they are. And I think they've reported that the demographics are exactly as we said, and we believe a milder patient population, it's going to be difficult to see an outcome there. So we don't see read-through to our study. It's also a different mechanism of action, a stabilizer versus a silencer. We like the silencing mechanism of action. What will be interesting is how the event rates play out, right? Does the milder population for TTR cardiomyopathy today really manifest in what we would expect fewer events in the placebo group. So we'll be very much focused on that.

And remind us how the responsibilities on the commercial side will be divided between yourselves and Astra?

Yes. So Ionis, we're really undergoing through some really exciting transformational changes today. We're moving -- we're now a fully integrated biotech. We're preparing for our first commercial launches, our first launch, we have eplontersen in a co-commercialization partnership with AstraZeneca and then come our independent launches soon thereafter, olezarsen, donidalorsen and others. We think this step is a key value driver for Ionis retention of more value for the drugs we bring to the market directly. For the [ co-co ] with AstraZeneca, our co-commercialization arrangement is for the U.S. only. They're responsible for ex U.S. commercialization. And in the U.S., and even globally, where we have an equal seat at the table with them in setting brand strategy, commercial launch strategy, certainly for the U.S. market, where we have a responsibility. We're sharing medical affairs responsibilities today. We're in the field, preparing the market for neuropathy and cardiomyopathy. We have the lead in patient services for the launch and communications as well. AstraZeneca is responsible for the field force in the U.S. and globally. So that's the arrangement. And as I said earlier, we're prepared for launch, assuming eplontersen gets approved in December.

Jumping over to olezarsen in FCS in severe hypertriglyceridemia. Are you thinking about the launch trajectory here or just even the initial kind of launch outlook just given your history with this space, but also what we're seeing with some of the buy-and-bill aspects in cardiology.

Yes. So olezarsen will be our -- is projected to be our first independent commercial launch. We're developing olezarsen for 2 indications, the rare genetic indication, FCS, and then the broad indication in sHTG. FCS has a prevalence of a few thousand estimated, sHTG is in the millions in the United States alone. As I said earlier, these are patients that are at high risk for acute -- severe acute pancreatitis that can be fatal, they also have cardiovascular disease, but what we're really focused on is improving the outcome or prevention of acute pancreatitis events in this patient population, very large unmet medical need here. The existing therapies are not adequate. They don't lower triglycerides nearly enough, not even close. Our mechanism, targeting APOCIII another LICA medicine, like eplontersen. We're expecting profound reductions in triglycerides based on all of our experience Phase II data as well as our predecessor, WAYLIVRA where we showed remarkable reductions in triglyceride so it is basically a better version of WAYLIVRA, more potent and really well tolerated with excellent safety profile. Olezarsen, well, let me -- before I get to the buy-and-bill question -- part of your question. This is a really attractive market opportunity. This is a market where patients and physicians are really waiting for a drug like olezarsen. There's like a segment of this sHTG community, we refer to as early adopters that have had 1, 2, 3 pancreatitis events already. They've landed in hospitals, their pancreas is degenerating from this. They're developing diabetes. They're desperately searching for a drug like olezarsen. These endocrinologists that are primarily prescribing, not cardiologists, although some cards do this. This is the endo population. And this early adopter population, this segment of these millions of patients severely elevated triglyceride represents a $1 billion-plus market opportunity by itself in the United States, blockbuster. We're going to be first to the market, substantially earlier than any competitors out there and we're planning to build this market out ourselves. Olezarsen nor eplontersen or any of our LICA medicines are positioned as a buy-and-bill -- with a buy-and-bill strategy. These drugs will not be administered by a healthcare provider, a Part B drug, if you will. And they will be prescribed naturally normally as nonbuying drugs are prescribed through specialty pharmacies. And patients will be administering the drug themselves at home with a simple autoinjector, self-administered very easily every month or so administration. Buy-and-bill has worked well in certain therapeutic areas like ophthalmology. Cardiology is a new area for this. It's going to be a tough road to convince cardiologists that they want to buy highly very expensive medicines, store them and then go through all that logistics associated with this. I mean we'll see what the future brings, but we were never big fans of the buy-and-bill strategy for these types of indications.

And then jumping over to hereditary angioedema, where are you getting the sense from physicians that they want to use this drug? Or how the uptake is going to play out?

Yes. This is interesting. This is really an interesting journey, how we got to Phase III development for donidalorsen, another LICA medicine like eplontersen and olezarsen. This is a different type of market than olezarsen, where we're first to the market, eplontersen is a big untapped market where very -- we're coming in really alongside competition. This is a market that's established, particularly with Takeda's Takhzyro. Takhzyro is mostly administered -- most frequently -- or mostly administered as every 2-week administration, subcutaneous. It can be administered every 4 weeks, but you lose a lot of efficacy if you administer every 4 weeks. And even every 2 weeks, there's still a big unmet need there for better efficacy. When we went into the Phase II study, we went in with our eyes wide open. It was like, hey, this is a market that's established. We're going to have to have a great-looking drug. I mean, donidalorsen hit on all the aspects that our market research said we needed to hit on for this drug to be competitive. Efficacy, better patients, physicians want better efficacy. We're-- we're obtaining in our Phase II data now in our long-term 2-year open-label extension data, reductions in HAE attacks on the order of 95% or so. Second, patients want better convenience. As I mentioned, standard of care is every 2 weeks, mostly. Our drug in development in Phase III now as a once per month or even once every 2-month dosing regimen, so less frequency of better convenience with the convenience of a simple painless auto-injector self-administered. So we have great tolerability which patients want. They have great convenience, and we think we're going to have great efficacy when the Phase III data reads out for a market that's not the sizable as olezarsen, not the size of eplontersen, but still an attractive market that doesn't require substantial investment to reach specialty centers where patients are being seen. So we're looking forward to the Phase III data, which we'll read out in the first half of next year. We're going to be prepared to launch, assuming the data is positive.

Where do you think the peak opportunities could be from these 3 assets.

In totality, multibillion dollars, obviously, eplontersen is total market opportunity of in excess of $10 billion. As I mentioned earlier, we expect to be very competitive and have a very substantial market share there, blockbuster for eplontersen. As I said earlier, olezarsen also, where we expect to be first to market, blockbuster potential, $1 billion plus in the United States, even with that early adopter group. Keep in mind, those early adopters are just a start, right? We get to those early adopters for olezarsen for severely elevated triglycerides. Then it's market build, then it's market expansion to get to additional patients that have triglycerides that are above 500 that we think will further add to the market. Donidalorsen for HAE is smaller, probably won't reach blockbuster potential, but still a very attractive market opportunity for Ionis.

Jumping to the pipeline here, your neurology portfolio, where you've seen a good amount of activity. What pipeline programs are you most excited about? And has the recent approval by the FDA for your drug in ALS impact your view on biomarkers and the regulatory landscape here?

Yes. We're very proud of the approval in April of QALSODY for SOD1-ALS. This now -- this is a drug we partnered, we licensed to Biogen, but it was -- like all of our ALS drugs today, SOD1-ALS was conceived and discovered and developed at Ionis, and then licensed to our partner, Biogen. This is the first ever drug approved for a genetic cause of ALS. I think when -- at the end of the day, once we get real world -- a lot more real-world experience with QALSODY, I think it will be the first ever disease-modifying treatment for any cause of ALS. And QALSODY represents now our second CNS drug for -- that's on the market for severe neurodegenerative disease, the first, of course, being SPINRAZA. I think QALSODY not only is a breakthrough for the ALS community and for SOD1-ALS patients in particular, but is really transformational for the whole field. First, the accelerated approval of QALSODY, laser path for potential accelerated approvals in the future for ALS based on neurofilament light chain as a biomarker. NFL is a now validated -- QALSODY validated NFL as a biomarker to monitor and potentially discover -- monitor progression and to develop drugs and get them approved based on reductions in this biomarker that predicts disease course in ALS. Second, I think it also reflects the fact that the neuro division is flexible. They're willing to bring drugs forward when you have -- when you look at the totality of the data, including a biomarker like NFL, along with all the clinical evidence that we have that QALSODY helping these patients for an accelerated approval, with -- and demonstrating that willingness and that flexibility to bring these drugs forward. We, today, with QALSODY and SPINRAZA, we have 12 medicines in clinical development for other causes of neurodegeneration and neurodevelopmental disorders and more coming. We expect to start 2 new clinical studies in CNS diseases year and more next year. So QALSODY is important. It's a further validation of our leading -- industry-leading I believe, CNS platform and further validation and really bodes well for the rest of our pipeline of CNS drugs that are coming.

You have an extremely deep and broad pipeline. So you were to focus the investor base on some of the key programs with whether their data reads over the next 12 months or that you think longer term, are there going to be key drivers for your future, where would you direct.

Well, certainly, eplontersen is a big one for the reasons we already covered. I mean, this is a really big market, and everybody is -- there's the unmet need in neuropathy and cardiomyopathy is enormous and we have a very competitive drug. And we're expecting our first approval by the end of the year. Olezarsen for the reasons I've touched on untapped market, blockbuster potential, big market opportunity. We have a great-looking drug Phase III data second half of this year. Thirdly, I would say pelacarsen. I touched on that briefly earlier, another big, big market opportunity in cardiovascular disease. Again, 8 million to 10 million people suffer from cardiovascular disease due to high levels of Lp(a) as a factor that causes that promotes thrombosis, atherosclerosis and inflammation in the vasculature. There are no treatments for this disease indication, and we are well on our way to -- for this Phase III outcome trial to read out in 2025. So that's another big non-rare big patient population that's coming. And if I could just add a couple of others that we didn't touch on. We're excited about the Angelman's program that's coming. This is a partnership with Biogen, neurodevelopmental disorder, a market that's projected to be even larger than SMA, significantly larger than SMA. And we love our drug. We think we have the right chemistry. And the study is coming to a conclusion. We may have -- we may be wrap up the study by the end of the year or sometime first half of next year. That's a big opportunity. I know a lot of people are very excited about that program. The other things that I would draw attention to is -- SPINRAZA continues to perform like a blockbuster. And despite emerging competition, there's quite a bit of post-marketing studies that are in progress today, and some of those studies are going to start reading out soon. These include -- and the purpose of these post-marketing studies is to demonstrate -- further demonstrate the added value, the tremendous value SPINRAZA brings to patients with respect to primarily efficacy really, really tremendous efficacy. So we have 2 studies in progress, which are to -- in which patients -- SMA patients are being switched over to SPINRAZA who are not doing well on gene therapy or on the oral medication at is. They're now being switched over to SPINRAZA. So that data is going to start coming out really soon in which we think patients are going to show benefit. In addition, SPINRAZA is now in a post-marketing study called DEVOTE in which we're looking at higher doses of SPINRAZA. SPINRAZA is really well tolerated. It enables us -- it allows us to go to higher doses and test for even greater efficacy in the clinic. And I expect that, that data will be coming out not too far down the road as well.

Any questions from the audience? One last question. You talked about how Ionis has changed in terms of its strategy and now you're codeveloping. I mean you're developing -- been developing with partners, but you're commercializing assets here. You've also started to bring in other technologies like your partnership with Metagenomi. So where do you go from here? I guess, how do you think about where you could further evolve and like, I guess, who is Ionis on the forward?

Yes. So when I moved into this -- my -- the CEO role in 2020, I laid out that we needed to really drive the greatest potential value for the company, for shareholders as possible is to bring products to the market ourselves, commercialize them, markets we choose to focus on for the market. We're doing that, and we covered that. The second was to extend our leadership position in oligonucleotide therapeutics and expand our capabilities to be the leader in genetic medicine someday. We have the right people. We just needed to pull that trigger, honestly. In 2021, one step along that way was we did a strategic partnership with Bicycle Therapeutics. We in-licensed exclusively Bicycle Therapeutics for targeted transferrin 1 receptor for opening up new tissues like cardiac myocytes and skeletal muscle. We've now moved into preclinical development, IND enabling tox studies, our first Bicycle siRNA molecule actually, for targeting heart failure, a new indication, and we expect more coming there. Second, last year, we did a new partnership, as you asked about, Metagenomi, for DNA editing. There's a lot of complementarity between oligonucleotide therapeutics and DNA editing. The medicinal chemistry toolbox we've developed over the years, our knowledge on experience in delivering nucleic acid payloads to different organ stems not just the liver, but the CNS, the lung and other organs too. We think we bring a lot to the table. The Metagenomi partnership gets us into DNA editing, next-generation DNA editing as well and it accelerates our step forward into DNA editing. And that's why we did the partnership was to expand. So the partnership is going great, and we're making great progress. We hope to provide some updates on some of the progress we're making later this year.

Great. Well, with that, Brett, thank you so much.

Thank you, Salveen.