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

Great. Thanks, everyone, for being here. My name is Yanan Zhu, and I'm one of the biotech analysts here at Wells Fargo. We're privileged to have the management team of Ionis Pharmaceuticals with us today for a fireside chat. And with me here are Beth Hougen, CFO; and Onaiza Cadoret, Chief Global Product Strategy and Operations Officer. Thanks, Beth and thanks, Onaiza, for being here.

Of course.

Thank you.

So a lot to talk about. I hope -- I was wondering if we can dive right in, into the eplontersen polyneuropathy U.S. approval and launch. I have a set of questions here. So how is the BLA going? Is it past the mid-cycle review? Any issues emerging from the review?

So maybe I'll just start really quickly with. Thank you for having us, first of all. And it is a great time to be at Ionis. We've got a whole host of commercial opportunities advancing towards the market right now. Eplontersen is our most advanced drug. It will be -- hopefully, we'll have our PDUFA date approval in December with our PDUFA date on December 22. And then, of course, we're making excellent progress on preparing to launch that shortly after approval. But maybe if I can just take a second to sort of set a framework for the company. There's just so much that's going on at Ionis right now. Obviously, eplontersen is a huge area of focus for us, but we're also really excited about olezarsen and donidalorsen, 2 Phase III assets that are moving towards the market. And with eplontersen being a co-commercialization with AstraZeneca. olezarsen and donidalorsen will both be commercialized by Ionis in 2 indications with olezarsen and then in HAE for donidalorsen. So a lot of excitement around those 2 assets as well all of the commercial prep that we're doing. The Phase III pipeline is advancing and expanding. We now have 8 drugs in development under 10 indications in Phase III. Continue to make progress. SPINRAZA is a global market leader, continues to show resilience in the face of competition and potentially will return to growth. And then, of course, recently, we had QALSODY approved, which is the first medicine approved for a genetic form of ALS, and we were really excited about that. It actually is our second approval for a neurodegenerative disease, and we're really excited to have QALSODY alongside SPINRAZA. And of course, lots of progress on the technology as well. So lots of things happening at the company. And with eplontersen and the exciting Phase III data we've seen, maybe I can ask Onaiza to sort of fill in on the data and where we are on the approval process.

Yes, I'd be happy to. Thanks for the question. So we're very excited about our first co-commercialization launch that's coming up with polyneuropathy. The PDUFA is December 22. We're getting all prepared for label negotiations. Everything's along track. There are really no surprises. And the team is preparing, right? Most importantly, we're making sure that supply chain is ready, that there will be enough product to get into channel post approval. And then obviously, all the other commercial launch readiness aspects are moving along well. We have had field medical in place for the last 2 years approximately. So that's going well, and they're testing out kind of our data streams right now. We've had 35-week interim data, the 66-week data, and the 85-week kind of long-term data. So we're getting a lot of great read on that from advisers. It's looking very strong from an efficacy perspective and a safety perspective. Our KOLs are really enjoying kind of the sustained and durable kind of reduction in TTRs, very nice, tight, tight, kind of stability of TTR knockdown over time, which really bodes well for our dosing regimen for once monthly, self admin. And then halting of disease progression as well as obviously improvement in quality of life and a substantial number of patients improving from the therapy, which was kind of really unexpected in this disease course because it's a very declining and progressive disease. So that's boding really well. Sales teams are pretty much all hired. AZ is leading the sales effort. Our nurse case managers are almost all hired as well, right? We've got -- so we're really in that phase in the last quarter to get the people in for kind of training, compliance training, disease training and eplontersen training as well. So all the readiness measures are actually in place to go and looking forward to the December 22 date.

Great. So you mentioned AZ hired almost all of the sales team. Is this going to be a neurology-focused sales team? And how is AZ going to leverage its cardiology sales -- present sales force for this?

It's a good question. So as you know, and I don't know if everybody else in the audience knows that polyneuropathy is about 40,000 patients worldwide, mixed phenotype. It's about 3/4 of that and 10,000 is pure polyneuropathy. So when the 25% pretty much the patients are going to present in a neurologist office, the other 3/4 are going to be ubiquitously kind of across the system. They have -- they can be enhanced surgeons in GI, cardiologist office as well. So we're really kind of trying to branch out with the sales team to the other places that they will present. So they will be calling on a variety of different physicians, neurology, cardiologists as well as a couple of others to where we've seen good uptake and identification of patients, and that will change and grow over time. Initially, most of the treatments in centers of explant, but we're also seeing treatment move out into the community as well. AZ has done a nice job. It's a mix of teams. They've hired people from outside the company as well for this launch. This is a Tier launch for AstraZeneca and people with amyloidosis experience, we're bringing kind of the rare disease amyloidosis experience to the table. We think that's really important for this launch and not just cardiologists. So it's going to be really a mix, mix of the 2. For the cardiomyopathy indication, which will come after, I think you'll see a lot more effort from their current Forxiga sales force at this point in time. We're focused really on the [ PMPs ] and leading into the systemic launch here.

Got it. Got it. For this launch, how should we think about it in terms of the competitive dynamics with Alnylam's existing silencers? Do you think this is mainly a newly diagnosis -- newly diagnosed patient opportunity? Or could this be also a switch opportunity?

Yes. So I think there's like this whole -- there are 2 parts of the marketplace, right? And it's mostly a silencer play for polyneuropathy. It's a systemic disease. If you get to cardiomyopathy, you have the 2 stabilizer silencer mechanism going on. Versus Amvuttra, I would really think about this as a market growth. This is a growth opportunity for all players in the marketplace. As I said, 40,000 patients for polyneuropathy, including mixed phenotype, less than 20% are on treatment, right? So lots of headroom to grow over here. If you take a look at where Amvuttra sales are coming from right now, more than half are really coming from switching first-generation Onpattro to Amvuttra. So even they are then really have a lot of work to do to get to new patients who are newly diagnosed as well, right? So they're going to churn through that business first. And I think by the time we're on, we're all going to be looking for new patients really to get on treatment. There will be some switch that will still be remaining, but most of the growth will come from new patient diagnosis.

Got it. Got it. Do you think you have edge or differentiation between you and AstraZeneca to acquire or encourage new patients getting treated?

Yes, yes. I think we have a very strong product profile. I'm very encouraged by a couple of things that are coming out in the testing. One is this really tight kind of TTR reduction over time. Physicians seem to really like that. They feel that, that knockdown and sustainability is going to give them better clinical effect in the long term. So that's really playing out well; halting of disease progression, improvement in the symptoms of Norfolk Quality of Life; and then our self-administration profile is also a nice advantage, particularly for -- actually both physicians and patients really like it for different reasons. The self-administration for patients gives them empowerment over their disease, the ability to take it with them where they are. It's portable with them, it's self-administered. So if they're at home, they're on vacation, the ability to travel with it is really a great degree of flexibility. And then for physicians and patients, it reduces the hassle factor of trying to go into the office for an injection, right? You don't have to go in, you don't need the appointment. And as I said, a lot of the treatment still is in centers of excellence. It's actually hard to get an appointment, and they're really far away. Some of them are living here in rural areas that are not close to center of excellence. So it's not like it's an easy drive to your doctor's office as well. So we think all of those will bear into place: efficacy, safety and administration.

Got it. In terms of pricing strategy, should we think about parity or some other strategies? What is the progress with your payer discussions? And how soon do you think reimbursement will be in place?

Listen, we will price appropriately as we always say, to ensure best access for patients. And price will be placed when we actually launch the product, you'll get a chance to see it. No surprises there, I think. I wouldn't say anything like really meaningfully different. I think that the uptake by payers has been pretty responsive to the rare disease. They're pretty quick to do formulary evaluations. This is a Part D drug, not a Part B. So we will have to go through P&T and formulary committees. That's usually depending on the payer and the plan, can happen in the first few months of the product life cycle as well. So they get the ability to prescribe it right away too. They just need to get like a temporary code and get it through. But then the full formulary evaluations happens in the first 6 months usually of a life cycle.

Got it. And that leads to the next question in terms of the milestones once you: a, after approval, how soon is the launch? And then b, after the launch, what might be the first sales and first appearance on income statement?

Yes. So I mean most companies have like as soon as you get the label done, you want to launch as quickly as possible. So it usually happens in the few weeks past approval. You would expect the same thing from us. We have a pretty big milestone attached to the U.S. approval of $50 million at Ionis. So that will be the first of many. We have a total in the deal of about $500 million of milestones coming up. This is the first of that, so $50 million of that. And then there are -- outside of the regulatory R&D milestones, there are also sales milestones that also range between $500 million to $6 billion. And so we would get payout for that. AZ will be booking the sales on the top line. We will be recording it in terms of a royalty stream that comes to us in the U.S., which is around the mid-20 percentage. And then outside of the U.S., we have a different structure, which is in the mid- to high teens.

Got it. Got it.

Do you want to add to that?

No, you covered it.

She's got all the financials down. I want to make sure I'm checking with my CFO here.

Yes. Yes. I think it's important to point out the U.S. royalty is not a tiered structure. It is mid-20s out of the gate?

Yes.

Got it. And in terms of what you have to put out because you have some responsibilities for certain costs of the launch, right? So what is your -- the thing that you need to do and pay for this launch?

Sure. So we're -- as Onaiza said, we're going to be responsible for the -- some of the medical affairs, all that is already in the field. We're working collaboratively with AstraZeneca on that. We'll be responsible for the patient services part of this, which is really important because as Onaiza said, we have the expertise in rare diseases. We have the expertise in the disease. We know these KOLs. Alongside that, we'll be responsible for the publication and presentation plans for the drug. But I think really what's important to remember is that this is truly a co-co relationship. This is a true partnership. AstraZeneca will be taking the lead in the field with a lot of those commercial and medical affairs activities. But we sit jointly with them on a joint product team. We work together on the product strategies, the brand strategies, the market access strategies, on a global basis, not just in the U.S. And I think that's a really important differentiator for us in this co-co and it's helping us to get ready for the subsequent launches, olezarsen and donidalorsen as those come down the path. Economically, what that means for Ionis is that we incur about 45% of the global Phase III development cost. AstraZeneca has 55% of those. And then for -- pardon me, the U.S. related commercial and medical affairs expenses. AstraZeneca has a much larger percent of those. We have a small minority piece. And then outside the U.S., we have no responsibilities for cost. That's all sits on AstraZeneca's responsibility and on their P&L. So I think it nicely mirrors a co-co structure without necessarily having that profit share complexity.

Got it. Okay. That's great color on the polyneuropathy franchise. But eplontersen has a much bigger opportunity in cardiomyopathy and the Phase III study is ongoing, potentially data first half 2025. So just want to get your thoughts on the recent data presentation by BridgeBio for their acoramidis Phase III ATTRibute study. What might be the read-throughs to your CARDIO-TTRansform study for -- in terms of future competitive dynamics in this cardiomyopathy space?

Yes. So acoramidis was -- I think it's really good for patients. I'll just start off with the headline there, right? It's really good to have another option as another stabilizer for patients that will be coming on to the marketplace. From our perspective, it's not the same mechanism, right? We are a silencer mechanism, we are a stabilizer mechanism. They do different things for patients. And as most KOLs will say, the order of entry for these drugs didn't work out the way that the biology works, right? The first is you want to turn the faucet off and reduce the production of the TTR, which is what a silencer does. And the stabilizer takes the fibril to the end and stabilizes them. So there is a part for both of them to play for a patient here, and they will compete more directly with tafamidis. From our perspective, we were really looking to see -- like everybody sized and powered their trials based on tafamidis' ATTR-ACT study. We know the market's changed quite a bit. Patients are getting diagnosed earlier in their disease, diagnostic tools have changed like scintigraphy, and we wanted to see kind of the demographics of their trial. And it was nice to see that they are more -- much more like a contemporaneous study, having milder patients in their study which is kind of what our expectation is of our TTR cardiomyopathy trial as well, and we're encouraged to see that. We're encouraged too that they had a good effect, albeit they missed all-cause mortality, but it gives us really strong consideration that we have double the size of any actually cardiomyopathy trial right now. So we're really looking forward to getting the best data of any CM trial. Thought leaders are looking at us as a landmark study because we will have data on lots of subgroups that are really important for them to know how to treat a mild patient versus a moderate or severe, and we will have a nice proportion of those 3. We'll have hereditary patients and wild-type patients, and then we'll have patients who are naive to tafamidis and on top of tafamidis and all being able to give you and give the market and the physicians some data sets what's the cardiovascular risk reduction that you can benefit from, from an eplontersen treatment. That's going to bode a long way for getting these 500,000 wild-type patients diagnosed and treated, yes.

Got it. And also, we have another event in a space that is the upcoming Advisory Committee for Alnylam's Onpattro in terms -- essentially for discussion for the 6-minute walk endpoint at the approval endpoint here. I was curious about your thoughts on how that will come out? And also in the event of a FDA approval, how should we think about potential impact to eplontersen's opportunity?

Yes, it's an interesting one to watch. I think the FDA is going to be looking pretty much at a functional endpoint in a market that already has a cardiovascular kind of hard endpoint from tafamidis, but it's the first silencer with functional endpoint in cardiomyopathy. So it's interesting for us to watch. I do think -- I think the biggest question really, as you probably all know, is that functional improvement in -- with the 10 to 15-meter kind of walk improvement, is that clinically meaningful and is that going to be really important from another product that will help patients in this area, and when the physicians find it clinically meaningful to be actually used in their practice. I think that's the biggest question. If they do get approval and they do get on market, then they have some really commercial kind of headwinds, I think, that are facing them. If I were looking at it, they've got that -- I don't have -- I didn't do the study for a cardiovascular endpoint. It's a functional endpoint. And then there's also the -- will the payers actually reimburse them as the way tafamidis is reimbursed? And then there's just see practicalities of an IV infusion, right, in the office pre-steroid treatment for Onpattro that will always be part of their product profile that when you have another product or choice with potentially a cardiovascular harder end point, what will they actually choose. So we don't really see it as a relevant direct competitor to us, but interesting to watch how FDA will make decisions on it.

Got it. Got it. perhaps we could pivot to olezarsen, the other drug with -- in Phase III with upcoming data. There's also going to be data on severe hypertriglyceridemia next year. So we have both near term and a bit of midterm data from this same drug. So let's talk about FCS, the near-term data. What is the bar for success from this Phase III study called the BALANCE? How much triglyceride lowering is necessary for success here? And also, what do you expect in terms of safety, such as platelet count and liver enzyme readout?

Do you want to take this one?

Yes, sure. Okay. So olezarsen, I think, for me, my personal favorite in the Ionis wholly-owned pipeline here. It's going to be our first independent launch. So it's a very exciting one. As Beth really nicely expressed, everything we're doing for the co-co for eplontersen is getting us ready for independent launch, and this is the way this was designed in these types of sequences. It's exciting on multiple counts. So first of all, we have the first indication, FCS. It's a rare disease, as you said. What's the bar for success? I'll get to that, but it is followed then by a larger indication for severe hypertriglyceridemias over 500 with a patient population that's addressable in the U.S. at around 3 million. There is a huge unmet need across both of those indications. FCS, there's really nothing on the market right now. These patients are -- if you followed kind of a day in the life of one of these patients, you really get to see how difficult it is to live with this disease. It requires the patient to be virtually on a no fat diet. Literally, they cannot take more than 2 spoonfuls of olive oil in the day. That means -- just think about that like every single day of your life. That's like no alcohol, no going out to restaurants, restrictive diet every day on what you face. And if you go off of that, you're feeling it in cognitive function, you're feeling it abdominal pain, and you're certainly at that long-term high risk of acute pancreatitis, right? So those are the types of things that these patients live for. I think the bar is get them an appropriate effective treatment that gets them out of risk of AP, Acute Pancreatitis and allows them to live somewhat normal daily life. Of course, you'll see triglyceride reductions. I just don't view it as like a bar for what these patients actually really need, right? Like it's more important to think about the totality of what you need to do for them to bring that in. We have had very strong triglyceride reductions in the Phase II studies that we did, which were in lower triglyceride level patients. If you recall, that was around 60% reduction. These patients have higher TG levels. We could see bigger drops because they're starting at a higher baseline. But again, I don't think that's the bar for FCS. The bar for FCS is get them an appropriately -- appropriate treatment that gets out of harm's way for AP, gets rid of the systems and allows them to get back into a normal way of life that they don't currently have.

Does that translate to a threshold level of TG, the target level?

No, not for FCS. No. I think for sHTG, the medical guidelines. So this is a nongenetically confirmed elevated over -- severely elevated over 500. The medical guidelines are very clear about getting patients out of harm's way. Both the ACC guidelines and the endocrine guidelines really talked about it in 2 ways. There is a threshold of 880. If the patients have determined 880 triglyceride levels, you want to get them shortly below that because that's when the chylomicrons increase biologically and those are leading to and they transport triglycerides, that could lead to higher acute pancreatitis risk. And then the guidelines will also say, try to get them below the 500 threshold because there is also additional risk of remnant cholesterol floating around in their body, that can lead to additional [ ACC ] dip as well. So you're trying to manage these 2 risks for the patient population. So we set these thresholds of triglycerides for severe hypertriglycerides.

So that is for the sHTG indication. But for FCS, it's just any reduction for those patients who will be beneficial because they started off so high?

So high. You're trying to get them out of the abdominal pain, the cognitives and of course, reducing their risk for acute pancreatitis, right? And that happens by also reducing their TGs, but there isn't a threshold that -- they're starting very elevated levels, but they have other things going on in their body.

Got it. Very helpful. I think the BALANCE study also has a higher dose than previously studied. I think this is an 80 mg dose. You mentioned some data points for the 50% -- like 60% reduction in people with lower triglyceride? Is it the expectation 80 mg? Could give you greater reduction?

We'll see how this plays out. We did -- we added in the 80-milligram dose because the FDA asked us to. They want to usually see dose ranging across two different doses. So we think that -- I think it's a really good addition actually to our clinical trials. And I think you have to always keep in mind. So there is a linear association that's been shown in some data modeling right for the higher the trigs and the higher the dose, the better the drop as you're saying. But always, I always get surprised by biology because there's biology that plays, the disease that plays into effect and you are trying a lot of other things that are going on with these patients as well. So we'll let the data bear out, but we are expecting to see data on both doses. And of course, the company and the FDA will make the right decision based on where the data comes out on those 2 doses.

Got it. And as the BALANCE study data readout time, how do we think about safety in terms of platelet count and liver enzyme? What to watch out for? And what's your expectation for a successful drug? What kind of profile is necessary in this patient population?

Yes. So I'll just step back, and I think they're -- one of the benefits of being part of a platform is that you could see actually some really good, nice read-through from all of our LICA medicines into the other LICA medicines. So we already have the eplontersen Phase III readout. It was very clean in terms of safety. We have over 8,000 patient exposure for these ligand-conjugated antisense molecules going on in the clinic, also looking really good from a safety perspective. So I don't expect anything different for olezarsen here. Yes.

Got it. In terms of comparing data set between Antisense and siRNA, I think we do have some data from Arrowhead also on severe HTG. Anything that we need to take into consideration when looking across the 2 data sets?

So that's a really good point. So a couple of things I may have missed in the -- in your first question. So we have a first-mover advantage with olezarsen. So we're well ahead of Arrowhead. On their sHTG trials, they did a Phase II, but it was in the more severe patient population, right? It was in the 500 plus. Our Phase II are in a more moderate population of 150 to 500, right? So you can't compare across those 2 different baseline characterization of patients. You actually have to compare it in the same. We also had different doses. As we just talked about, we had the 50-milligram there, and we have a higher 50 milligram and 80 milligram going on in the higher one. So I really would encourage us not to compare those. You should never do cross-trial comparisons, but here, you actually study different patient populations as well. We are well, as you've said, into our Phase IIIs with the 2024 looking at enrollment completion here. Arrowhead has not started their Phase III yet. And as we've got advice back from the regulators when we were designing ours a couple of years ago, is that you need to study 1,500 patients. You need 1,500 patients worth of patient exposure. So we've got the 2 pivotals plus we have CORE 1 and CORE 2, where we have an SS trial to gather the safety exposure as well. So collectively, we'll have 1,500 patients. So as you're looking at the Phase III studies for all other players in the space, I really encourage you to see whether they're actually sized appropriately to what the FDA guidelines have been for us because it's going to be the same across the board.

Got it. Yes. Obviously, sHTG is a market with more than 3 million eligible patients for treatment, and that's appropriate from this trial?

Yes. For prevalent diseases, you need the ICH guidelines that required to characterize safety in those large populations in a meaningful way.

Yes. So I was wondering, do you plan to launch? Obviously, you will launch in FCS on your own. But for severe HTG, a much larger population, what's your thoughts there?

Yes, we're planning. There's a lot of work going on for the launch of both indications for Olezarsen. That's why I say it's one of my most exciting areas because you have to think about going from a rare disease to more prevalent. And we've also have the 3 million patients that are being treated by 2 very different physician types, the cardiologists and the endocrinologist. So we're doing a lot of segmentation work to see where these patients are going to be treated as early adopters, which will take more time, what's kind of this aggressive treatment mentality do we have, and we're seeing a lot and understanding a lot about the different physician segments for sHTG. So it's going to be a handful of cardiologists and a lot of endocrinologists. Preventative cards are really eager to have a treatment option over here, lipidologists as well as endocrinologists. And once we've understood kind of the go-to-market kind of approach to where the uptake will be, we will size our field force accordingly as well.

Got it. Got it. And maybe in the time left, I wanted to touch on some broader pipeline programs. And I -- given the time, I think let's talk about Angelman syndrome, you're going to report data or you and your partner, Biogen, are going to report data mid-2024. Can you talk about in terms of number of patients, what endpoint. And also in general, how do you feel about the data Ultragenyx has produced so far? In your assessment, is that kind of an improvement that sets up the bar? Or do you think there's still room to further improvement?

So Angelman's is 1 of 12 neurodegenerative disease drugs we have in development today in clinical development in patients. So we're -- I think we obviously have a leading pipeline in neurology. It's a focus for the company. The study is a Phase I/II study, so it's in patients. It's about 44 patients, ages 2 to 50, so a broad patient population. We're assessing safety. Obviously, since it's the first-in-man clinical study. But we're also looking at various different doses with the dose escalation study. We're looking at PK/PD, target engagement. We'll be looking at biomarkers. We'll also be looking at potential endpoints that we could use for the Phase III study. And all of that data is going to be very informative as we and Biogen, look forward, hopefully, to bringing that drug into Phase III development. As you said, we'll have the data from the study in mid-2024, exactly what that data package is going to look like. We haven't worked that out yet with Biogen. But I know that this is a program they're excited about, and we're looking forward to sharing the data.

Got it. Beth, I wonder if you -- we can end with a discussion about the financials. You have many Phase III studies ongoing. You will launch your wholly owned drugs: olezarsen, donidalorsen in the coming years. How should investors think about R&D and SG&A expenses going forward?

Sure. So we have a healthy balance sheet today. And that puts us in a very unique position. We also have a very substantial sustainable base of revenues from SPINRAZA royalties as well as from our currently partnered programs. All of that helps us fund the investment period that we find ourselves in today. We're sort of at the top tier of our R&D expenses as these big Phase III studies are fully enrolled or nearing full enrollment. So we would anticipate that, that will start to level off over the next coming years or so. SG&A expenses, however, are going to grow as they should in order to be able to drive the top line revenue growth that's so important for the company and, frankly, for bringing these drugs to patients. So you can anticipate that, that will grow and that should grow at least ahead of revenues. But once we get on the market with these drugs, it should grow in relation to the revenue growth that we would anticipate. So look for us to be investing for growth over the next little while, but with a healthy balance sheet to support that.

Got it. That's very helpful. With that, I think we're out of time and really appreciate Beth and Onaiza for being here and providing these updates.

Thank you. _

Thanks for having us.