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

All right. Good afternoon, everyone, and thanks for joining us at the Morgan Stanley Global Healthcare Conference. I'm Mike Ulz, one of the biotech analysts here, and it's my pleasure to introduce Brett Monia, CEO of Ionis Pharmaceuticals. Just a reminder, the format for today is a fireside chat. If anyone in the audience would like to ask a question, please raise your hand, and we will get your question addressed. Before we get started, I just need to read a quick 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. With that, Brett, thanks for sharing your time with us today. And maybe you can kick us off here with just some introductory comments and we'll get into Q&A.

Happy to, Mike. Thanks, and appreciate the opportunity. Really great to be here. So yes, we're really excited about the progress we're making across all the key aspects, functions of the organization today. We're laser-focused as we have been for the last several years in delivering a steady cadence of new really important medicines for patients to drive value for all stakeholders, including, of course, our shareholders. Laser-focused on our 3 near-term commercial opportunities, which will be commercializing ourselves as we move to a fully integrated biotech, which we're just about there now. We're ready for launch. Eplontersen for TTR amyloidosis, Olezarsen for diseases related to severely elevated triglycerides and donidalorsen, our prophylactic treatment for HAE, all going very well, as is our really broad late-stage Phase III pipeline. Today, we have 8 drugs, including those 3 for 10 disease indications, both rare and broad indications, and they're all firing on all cylinders, going well on track for their scheduled readouts. We're pleased with the performance of our lead commercial product with Biogen, SPINRAZA. SPINRAZA continues to be the foundation of care for all forms of SMA. More patients are on SPINRAZA significantly than any competition and SPINRAZA continues to deliver great value for patients. And we're really pleased with the approval of QALSODY earlier this year, a drug that was discovered and conceived by Ionis and then now launched by our partner, Biogen, for a genetic form of ALS. QALSODY is the first drug ever to target a genetic cause of ALS and probably the first drug that will actually have a disease-modifying impact on patients with ALS. And it also represents our second drug from our vast neurodegenerative neurological disease pipeline today, which today has 12 other drugs in clinical development for neurological diseases. And our technology continues to expand and diversify, really enabling us to continue to deliver new medicines to the market for many, many years to come and to really maintain and really improve upon our leadership position in organic-type therapeutics. So we're very excited about all that. And I couldn't be more excited about the future.

Great. Thanks for that introduction. And I thought maybe we could start with eplontersen under FDA review. Currently, you have a PDUFA date in December of this year for TTR polyneuropathy. Maybe just talk about launch preparations with your partner, AstraZeneca, and maybe your early launch strategy?

Yes. We're really, really couldn't be more pleased with the performance of eplontersen in TTR polyneuropathy. We reported data -- new data this year, long-term data, our week 66 data and then our 19-month data. Long-term treatment with eplontersen for TTR polyneuropathy continued to demonstrate a really, really robust efficacy profile, a very competitive profile, with excellent safety and tolerability, even with long-term treatment and with the simplicity of a presentation which patients can dose themselves, using a simple fine needle auto-injector, painless injection once per month. So we're excited about eplontersen for TTR polyneuropathy. As you said, Mike, we're under regulatory review. I'm also pleased to announce with the December PDUFA date with FDA. I'm also pleased to say that we're also under review now with Health Canada. We filed and they have accepted our application. So we're looking forward to that, and we're expecting additional filings in the second half of the year in other jurisdictions. Launch preparations are ready to go. We and our partner, AstraZeneca, have essentially everything in place right now. That includes our commercial organization. Our -- we've done our market access research. We have our tactical plans in place. We have our brand plans in place, including -- in our tactical plan, including our medical affairs teams, which are out in the field, where we have significant presence with AstraZeneca at all the major medical congresses, advocacy groups, patient groups and so on. And the final touches are being put on our field force for launch. And we're expecting to launch semi approval or very soon after approval. So we're ready to go there. And this represents a milestone achievement for Ionis as this is our first commercial launch that we'll be participating. It will be a coco, but we have a very significant role with AstraZeneca and then come our independent commercial launches to follow.

Maybe you can talk about dosing. You touched on it a little bit, but maybe put that in the context of dosing from the competitor every 3 months, in the office versus monthly at home and kind of what feedback have you gotten there?

We've done extensive research independently as well as with our partner, AstraZeneca, in really learning what the patients want, what physicians want, and the -- you need to really think about the full package, right? Patients -- our market research has informed us that the majority of patients, the majority of physicians really prefer an at-home, self-administered, simple injection. A medicine that can be administered by the patient themselves at their convenience, where and when they want it. These are patients that are usually -- are often presenting in younger years of life. They have very busy schedules. Some are infirmed, some have to travel long distances to see doctors and physicians scheduling. Clearly, we see substantial advantages to a self-administered at home, self-administered product like eplontersen. So we're very pleased with that, and we think that, that's going to go very well on the market.

Makes sense. Can you maybe also talk about some of the differences in the co-pays relative to the competitor and maybe how that could potentially change next year.

With the IRA that kind of -- yes, yes, we've been doing a lot of work at Ionis and with our partners somewhat too, really understanding how the upcoming fair price negotiations are going to impact our pipeline. Our focus on, like I said, on our wholly owned pipeline. For -- and positioning our drugs to maximize value for patients and shareholders. For eplontersen, I think there's 2 things that's really important from the IRA that's going to impact this program, both in a positive manner. The first is, of course, eplontersen is an orphan drug, orphan drug designation and as you know, Mike, the fair price negotiations do not apply to orphan drugs. So -- and it's also really important to recognize that although we're developing eplontersen for both cardiomyopathy and polyneuropathy, with polyneuropathy coming first, it's viewed by -- in our market access research payers and so on has 1 disease. So this is a single orphan disease with multiple phenotypes, but with single orphan disease IRA will not apply to price negotiations. But the second part is related to your question just earlier about mode of administration. One of the disadvantages of Part D Drugs, Medicare Part D Drugs over many years has been the out-of-pocket expenses that patients have to endure that are greater, substantially greater in the past than Part B Drugs, which are administered by a health care provider. That's all going to go away with the IRA. With the -- this out-of-pocket expense disadvantage in the past for Part D Drugs, it's called -- sometimes called the donut hole starting next year with the IRA that's going to go largely go away. The maximum when this really kicks off of out-of-pocket expenses for patients would be $2,000 annually. And that includes all medicines that they're taking for the disease and not just eplontersen, for example. So the fact that we have an orphan drug and the fact that the out-of-pocket expenses is very favorable now for eplontersen, coupled with the self-administered at home and auto injection. We think it's a really, really big advantage for the drug.

Makes sense. Maybe we can shift a little bit to TTR-CM. Obviously, you're in your Phase III CARDIO Transform study. Recently completed enrollment. Maybe just recap for us some of the recent changes you've made and maybe recent data from a competitor that maybe helps you sort of think about those decisions.

Yes. We're very proud of the fact that we completed enrollment in our CARDIO Transform study in July. This is a landmark study based on the size of the study. Never before has a study of this magnitude been conducted for TTR cardiomyopathy, not even close. More than 1,400 patients were enrolled in the study. And Mike, we were also very pleased with the demographics that we landed with in. We have a good balance of patients in this study that are naive to any other treatment as well as on top of tafamidis use, which is really the standard of care for TTR cardiomyopathy in many markets, including the U.S. Excellent demographics and also, we were able to have a very significant percentage of patients that are hereditary with hereditary cardiomyopathy in this study. So we're going to have, we believe, the richest data set once the study reads out compared to anyone -- any other medicines that are out there for this disease. The upsizing of the study that we did, which we have now completed, of course, with completion of enrollment was a highly strategic decision that we think is going to bode very well for this very large market opportunity, maybe up to $10 billion market opportunity. The patient demographics for this disease indication has shifted substantially since the early days when drugs were being tested for this indication, particularly tafamidis. Patients are being diagnosed with TTR cardiomyopathy much earlier in the disease based on better diagnostics, based on better disease awareness, and therefore, patients are surviving longer. So therefore, to have the proper powering to help ensure for the successful study and the most successful study, so the richest data set, subgroup analyses, the ability to maybe make claims on how good is your drug on top of tafamidis, not just on naive patients, how good is your drug in hereditary patients, stage I, stage II or Class I, Class II, Class III. It's all going to bode very well. So it's really important that we made an adjustment in the design of our trial, to match, to account for the changing demographics in this very large -- in this disease indication, which is a very large disease market opportunity. As far as the recent data that was on acoramadis, I think you're referring to, I think it really strengthens our conviction that we have the right trial design. Based on the event rates in that study, based on the demographics of that patient population, it's exactly why we upsized the design of our study to account for changing demographics. It's a different mechanism. It's a different trial. So it's really difficult to do cross trial comparisons, dangerous actually to do that. But when you look at more appropriate things to look at, which are the demographics, it really does strengthen our conviction in our trial design. And it also strengthens our conviction that mortality endpoints are important to achieve in these cardiomyopathy trials and we believe that the powering and the size of our study will help actually be able to demonstrate at least that's our goal, to show a meaningful significant improvement in cardiac mortality. So we don't see a lot of readthrough to our trial, but certainly, the data that we have seen strengthens our case for our trial.

That makes sense. Maybe another competitive question here. Yesterday, briefing documents from another competitor also in TTR-CM, but no outcomes, but maybe you could just share your thoughts. Any read-through to your program from what you saw in the briefing documents yesterday?

No, not really. We don't really see much read-through to eplontersen cardiomyopathy program, except to -- except that, we're comforted that a silencer showing is providing evidence of efficacy. It's a very small study. It's a very short study. So we can't really read into much more than that. The demographics support our study, as I just described for the other drug that the patients are a milder patient population. But short of that, we've been saying -- when we saw that there was going to be an advisory committee by the FDA, we concluded that the most important aspect that the panel will be asked to weigh in on will be the clinical meaningfulness of a small benefit in a functional end point. Not a mortality endpoint, but it's a functional endpoint, 6-minute walk. And that's exactly what the briefing document has shown. But other than that, we don't believe that it has any bearing on how we conduct our study or any concerns about our study. It just strengthens our conviction.

Makes sense. Any concerns for your study and ability to show a benefit on top of tafamidis? Do you think that's more challenging? Or what's your level of confidence there?

Well, we're going to need to see the data. Of course, no one's ever done an outcome trial with a silencer on top of a stabilizer. Again, I don't think -- the numbers are just so small in the trial you're referring to bear -- to make any assumptions or estimates on what a silencer will do on top of the stabilizer. Just -- I don't believe it's relevant to our trial. We know that despite the fact that tafamidis is actually helping patients, patients are still sick. They're still progressing the disease. Some physicians you might talk to might say, by patient doesn't even know they're benefiting. I know they're benefiting because I'm doing noninvasive measures of their heart function stuff like that. They don't feel much better. In many cases, a lot of room for improvement is my point. And I think that blocking the production of the disease-causing protein in such a substantial way like eplontersen does with more than 80% reductions in the disease-causing protein, I think we have the opportunity to really demonstrate greater efficacy compared to a stabilizer in some of our subgroup analyses, but also added benefit on top of the stabilizers. So there's a lot of room for improvement despite the fact that this is a drug that is helping. that drug that's helping patients.

Got you. It makes sense. Maybe we can shift to olezarsen. Maybe just remind us the mechanism there and the strategy? You have a couple of different studies ongoing.

Yes. Olezarsen, we're equally excited about. Olezarsen represents assuming positive Phase III data approval, our first independent commercial launch for Ionis. So we're really advancing in a very stepwise manner, building our own commercial capabilities and launching drugs of our own. Eplontersen being the first and then olezarsen as our independent launch. This drug is being developed to treat patients who suffer with severely elevated triglycerides. Patients with severely elevated triglycerides suffer from a whole host of morbidities, potentially mortality. The primary focus is acute pancreatitis, which can be fatal. And you can get acute pancreatitis from different causes. But if you have it from severely elevated triglycerides, and it's particularly severe, and it's particularly recurring. So once you have one, the chance of having another 1 increases and increases. Patients end up in hospitals. They spent long time of times in physician care. They are -- they live their lives in fear that it's going to happen again. There are no drugs today that effectively lower triglycerides in these severely elevated triglycerides, not even close. They also have other co-morbidities including cognition issues. They have body pain, diabetes risk and so on. Our drug, olezarsen, is targeting APOCIII, a master regulator of triglyceride clearance and clearance, metabolism. And we have shown in our Phase III study, substantial unprecedented really at that time, reductions in triglycerides in patients with elevated triglycerides. Far beyond that of current standard of care. So that's our patient population. That's our target. We're studying olezarsen in 2 disease populations, 1 is called FCS, familial chylomicronemia syndrome, which is -- which has a genetic cause the severely elevated triglycerides. And then -- that's a rare disease. And then we're also developing -- studying olezarsen in another Phase III study, severely elevated hypertriglyceridemia, which sHTG, which has no known genetic cause to it. But both patient population suffer from all the comorbidities and potentially mortality that I just took you through. So we're developing olezarsen to treat rare and broad indication. Our Phase III data for the rare indication FCS will read out in the second half of this year. And then the sHTG Phase III study is enrolling. And we're prepared to launch the drug, assuming a positive outcome and approval.

Can you maybe talk about your decision not to run a cardiovascular outcome study and why is that important or why don't you need one? There seems to be some debate around that.

The cardiovascular risk associated with patients that have severely elevated triglycerides is modest at best. This is really a disease indication that's focused on the endpoints that I just mentioned, acute pancreatitis, metabolic disturbances, metabolic dysfunction. The risk of cardiovascular disease is there, but not it's that significant in this patient population, which is patients with triglycerides 500 or above, right? What we know is also based on the extensive market research we've done, market access research including market access, is that there's a targeted population of physicians that understand the risk of severely elevated triglycerides as it relates to acute pancreatitis and other problems. And they are eager to have a drug like olezarsen to deliver to patients. These are primarily your endocrinologists and really most endocrinologists understand this unmet need. And then there's a segment of cardiologists who want to get their lipids down. They want to get their triglycerides down because although they understand that the cardiovascular aspects of the disease are minor compared to the metabolic aspects of the disease, they still want to treat it. This is what we call our aggressive treaters, our early adopters. And this is a population that we'll be focused on when we launch all olezarsen for sHTG initially in our first -- our target base, if you will. So we don't really need our outcome trial, just the ways to get to the market. We don't see any benefit from market opportunity, commercial opportunity with that data. And we're focused on the primary endpoint in triglyceride reduction.

Is there any potential that maybe payors are interested in the cardiovascular outcome study? Or is that unlikely in the context of the disease and the focus on pancreatitis?

All the market research we've done, U.S. and ex U.S. does not indicate that anyone is looking for outcome data at all for reimbursement with -- reimbursement that is very attractive to Ionis. And the short answer is no.

Got you. Maybe we can shift to on donidalorsen. Maybe just walk us through that program. You've had some very promising data so far, maybe recap that and then sort of next steps of growth.

So donidalorsen is our third near-term commercial opportunity for Ionis that we're bringing to the market ourselves. Donidalorsen is really exciting new potential treatment for -- as a prophylactic for hereditary angioedema. What we know from all the research we've done over the last several years is that despite the fact that there are several treatments opted today prophylactically treat HAE, either daily dosing, weekly dosing, every 2 weeks dosing, maybe monthly, although it's not very effective, patients are still suffering from HAE attacks and some patients are suffering from a lot of them, but most patients are getting attacks throughout the year despite treatment available. What we also have learned is that patients want more drugs to prevent the disease that are more tolerable, easier to administer as well as just better tolerability. And then thirdly, as I just said easy to administer the convenience or the simplicity, I should say, of a drug with a profile, just like eplontersen, or olezarsen, self-administered by the patient monthly as a simple fine needle auto-injector. The Phase II data that we announced last year was -- had a profile of potential best in efficacy plus with the convenience of once per month dosing, self-dosing and with great tolerability. What we reported this year was that patients that went into the open-label extension from the Phase III study, I should say that the reductions that we saw were mid-90% range, 95% reduction in HAE attacks with even more patients in that percentage-wise that were attack-free to be finishing the study. So great efficacy unprecedented. That all continued in a 1 year and now a 2-year open-label extension with no emerging safety issues. So it looks to be durable as well. The Phase III study is underway. And we're looking forward to the Phase III readout in the first half of next year.

Maybe just briefly as we think about the readout next year, is there a certain threshold in the reduction of attacks that you need to see or how do you think about that, more for use or switching the current sort of thought process of physicians?

Of course, we have to replicate that Phase III data, Phase III data doesn't always perfectly replicate in Phase III. So anything approaching the level of efficacy that we saw in Phase II, I think, is a big win. The open-label extension data, again, I think, gives us confidence that we're going to see that. The other thing that I mentioned is in the Phase III study, we're also looking at every 2 months dosing in addition to monthly dosing. So we're going to be very interested in seeing that outcome. But the unmet need here for both simplicity of administration, tolerability and efficacy is very significant. So I think if we can approach any -- really approach the data we got in Phase II, I think that we have a real winner.

We've got about 1.5 minutes left. So maybe last question, just -- we touched on a lot of this, but just if you can map out the catalyst for us over the next 6 to 12 months because you got a few of them.

There are quite a few. So I touched on just a moment ago, we're looking forward to more Phase III data this year. This 1 being for olezarsen in FCS in the second half of this year. Certainly, as we approach the end of the year, the approval of eplontersen will be a really significant milestone for the company. And then as we just bridge into early next year, the launch for eplontersen is going to be a really exciting catalyst, I believe, for the company. And then as I said, the donidalorsen HAE Phase III data in the first half of next year will also be a very important new catalyst. It will, of course, be quite a number of mid-stage readouts that we're expecting next year, particularly from our neuro -- neurology pipeline. But between drug launches, approvals and Phase III data, that's a lot.

Yes. Yes. Like going on to lot to look forward to. Why don't we end it there. Thanks so much, Brett. Appreciate your time.

Thanks, Mike. It was a pleasure.