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

Good afternoon, everyone. Thank you so much for joining us. We're really pleased to have with us Brett Monia, CEO of Ionis.

To start here, Brett, a few late-stage programs in the clinic and multiple potential upcoming commercial launches, can you walk us through your near-term outlook and your level of confidence into these key events?

Happy to. So we have -- focusing on the pipeline. We have one of the richest Phase III pipelines out there today, all -- firing on all cylinders, really progressing right on track with 9 drugs in Phase III development today with -- for 11 indications. We expect that to expand to at least 10 by the end of this year. And we've already had several positive Phase III readouts and approvals. I would draw your attention to maybe 4. We don't have to cover all 9. The first is WAINUA for hereditary ATTR polyneuropathy. We are thrilled to have the approval with a really great label last December, and we launched with our partner, AstraZeneca, in late January. This is the first co-development, co-commercialization agreement in Ionis' rich history, and it's the first step to us independently commercializing our own drugs. The launch is off to a solid start. And the Phase III cardiomyopathy indication is also -- is running well. The second would be olezarsen, a wholly owned treatment for severity triglycerides. Two indications just like WAINUA, a rare indication and a broad indication, FCS and sHTG, respectively. We reported in April, very positive Phase III results for olezarsen in FCS at ACC. And we're -- we've now submitted our NDA for that approval, which can come later this year and the sHTG trial is progressing nicely. Thirdly, I would say, donidalorsen as a prophylactic treatment for hereditary angioedema. Donidalorsen -- we reported just -- I think it was 2 weeks ago, a comprehensive review of the Phase III program results for donidalorsen at the EAACI Conference in Valencia, Spain, very positive results. and we're planning to submit for approval in the U.S. later this year. And then the fourth drug I would draw your attention to is a partnered program, a fully partnered program, pelacarsen for lipoprotein (a) driven cardiovascular disease. This is a -- an enormous unmedical need in the CD -- cardiovascular space. Patients suffering with cardiovascular disease due to highly elevated lipoprotein (a), a risk factor, no treatment options available today. Pelacarsen has first mover advantage with Novartis. That's our partner. And we're looking forward to Phase III data next year for that program. So last year, this year, next year and beyond, we're looking at a steady cadence of Phase III readouts, potential approvals and launches. So it's pretty exciting.

Let's start with WAINUA. Can you walk us through how the commercialization responsibilities are split with partner AstraZeneca and what you've observed early in the launch and how it's fitting into the competitive landscape?

Sure. So as I mentioned, we launched in late January. WAINUA is -- as I said, is our first co-commercialization partnership as a stepping stone to our first independent commercial launches for Ionis. It evolved. It has evolved in this co-development, co-commercialization partnership. We -- we're responsible for the -- running the Phase III programs, polyneuropathy and cardiomyopathy. We had responsibility for regulatory submissions for polyneuropathy, and we're beginning to now transition that over to AstraZeneca as we approach the cardiomyopathy readout. We also had several other responsibilities on the commercial front. We led with medical affairs, and we did that for several years, and now we've transitioned those responsibilities over to AstraZeneca. Together, we work on brand strategy. Together, everything from market access, pricing, all that jointly -- in our joint project team. Today, our primary responsibility is patient education management. It basically means we're the face to the patients on disease education, on how to administer, self-administer WAINUA, how to inject, reimbursement process to smooth streamline that along. So they get -- it's a seamless process and more of that. And AstraZeneca is principally responsible for the sales force, basically, the field force. And this COCO is principally in the U.S. Outside the U.S., they have global commercialization responsibility. So it's a step towards our first independent launches. The launch is off to a good start. It's early days but we're achieving or exceeding all of our key performance metrics that we laid out last year for WAINUA. And a lot of the advantages that we thought were going to really resonate with patients and treaters are really resonating. The ability for patients to self-administer using a simple auto injector once per month, it's a big attraction. There's no need to set up an appointment with a health care provider to do so. That's an ease injection. A great efficacy, of course, a great safety label. That's, of course, very important as well. And also just the ability for Ionis and AstraZeneca to work together using our expertise in TTR amyloidosis and their global presence to be able to access patients around the globe. In addition to the U.S. approval, we're expecting approval in Europe this year. We're expecting approval in Canada this year and possibly other territories. We're under review in nearly a dozen other territories today around the globe. So it's early days but we really like what we're seeing in the launch.

Now to the TTR cardiomyopathy program. I recognize that you're running your own Phase III but you've got Alnylam reading out their APOLLO-B Phase III trial. So maybe help us understand what you'll be focused on with regard to their program and the read-through to yours?

Our Phase III program, we believe, our partner AstraZeneca, strongly believes that we have the right trial design for TTR cardiomyopathy. This is the largest, by far, more than double the size of any trial ever conducted in TTR cardiomyopathy, a really -- a disease with high prevalence still remaining high unmet medical need. Our trial is the largest because it accounts for the change -- the demographics that has shifted in TTR cardiomyopathy. Gone are the days of the patient demographics that were targeted with tafamidis, back 10 years ago when tafamidis was developed. Patients are being diagnosed much earlier in their disease because of better diagnostics, better disease awareness, and therefore, you need to do bigger trials. The bigger trials, and we have the biggest trial to have the proper powering and to provide the richest data set for this disease indication when the study reads out. We think we have the right trial design. With that said, we're very much looking forward to the readout from the first silencer in TTR cardiomyopathy as is many other people. And we're particularly interested in how it all plays out. How do they -- whether it's statistical significance is achieved in combination usage, monotherapy usage or I should say, the overall population in monotherapy usage effect size and so on. At the end of the day, we don't really think it's going to have much impact on our trial. We -- like I said, we believe we have the right trial design, and this trial needs to run its course because it's positioned to be -- to provide the richest data set of any trial ever conducted in this disease area.

You speak to whether you would wait for the full data by -- in 2026 or whether you could decide to take an interim look and end the study early.

Our base case is to let the study read out, go to the finish line. 140 weeks, all patients, more than 1,400 patients. So our base case is 2026. And that is related to what I just touched on. We have the right trial design positioned to provide the richest data set to read effectively [Audio Gap] Could we read the study out early? Sure. But it cannot come [Audio Gap] that we can read the study out early and essentially have the same data set, the rich data. Next year as we would have gotten if we waited until 2026, certainly, we can do that. And we and our partner, AstraZeneca, are working on what the scenarios could be to maybe do that. But today, everyone should assume that the base case is 2026. And we believe that, that's going to work just fine because of the design of our trial and the quality of the data we're going to get from this study.

Remind us what you're seeing with regard to blinded event rates and your target split of enrollment between monotherapy and tafamidis baseline patients with the upsized enrollment? And how you're thinking about confounding effects from tafamidis use?

So today, we ended up exactly where we intended to be designed a trial with respect to patients that are naive to tafamidis and patients on tafamidis. And we were able to do that because there are several layers we were able to pull to adjust the demographics based on availability of tafamidis to prioritize sites where tafamidis wasn't available to get those monotherapy patients into the study. U.S. sites where tafamidis is largely present. What we -- our target was to have a good balance between monotherapy patients and tafamidis usage in the study, and that's exactly -- that's where we landed. So we have a good balance between both. The blinded events we're monitoring as we go, and they're tracking well to our projections when we set out and designed this trial, where we should be at this time with respect to mortality, CV hospitalizations. We're also very carefully monitoring blinded events in the patients that had tafamidis usage at baseline as well as monotherapy usage at baseline and it's tracking well. Typical CVOT's, cardiovascular outcome trials really have a big uptick in the last year or 2 of their trial, and we're seeing that. So it's tracking as we expected. We don't see any confounding effects of usage of tafamidis in the study [Audio Gap] assuming that patients were going to a subset of patient [Audio Gap] tafamidis in this study. And based on our powering assumptions and our expectations for the effect size, we took that into account when we designed the study. With respect to drop-ins in the study that patients that weren't on tafamidis at baseline that then we're seeing almost none. Very small number of patients actually moving on tafamidis during the course of the study. It's going to be insignificant. And it's important to remember that tafamidis has a very -- it takes a long time before it kicks in. So it's not going to have a meaningful impact.

Where do you see the drug being used in the patient population?

For cardiomyopathy, we actually think that this is going to be a very dynamic market. When assuming approval and we knew a launch in cardiomyopathy, in the U.S. and now in many emerging and additional ex U.S. markets, tafamidis is the standard of care today. But I think it's really important to recognize that the vast majority of patients are continuing to progress on the tafamidis. They're not getting better. They're slowing down the progression and some patients aren't getting much benefit at all and there's a need for new treatment options, combinations or better treatments. And to predict whether or not readers are going to treat the combination usage or payers are going to pay before there's actual data, I think is premature. This is going to be a dynamic market. And if our study plays out the way we expect it to play out because of the design of the study, we think it's going to support monotherapy usage for newly diagnosed patients. Switching for patients that aren't doing as well as a physician, a cardiologist wants them to do [ and then ] switch to a silencer. And then thirdly, if the data supports it, to combine the usage because we strongly believe that if there's data to support that patients are going to do better on combination usage, a cardiologist is going to advocate for their patient because they need more effective treatment options. So we think it's going to be highly dynamic but it's got to be data-driven, right? And we're in a position to have the richest robust -- most robust data in combination usage as well as in monotherapy usage.

And how are you thinking about the impact of the Medicare Part D, do you redesign with regard to how this might position the drugs within this landscape?

Yes. That's a great development for WAINUA and all Part D drugs. There was a real disadvantage for Part D drugs for many years, the donut hole, I guess, they call it, in which there was significantly higher out-of-pocket expenses for Part D drugs versus Part B drugs. That has -- and WAINUA was a Part D drug self-administered, that has largely gone away this year with a total cost to patients for all treatments, not just one treatment but for all treatments for their disease cap to $3,300, and now it's going to go down to $2,000, and there's ways to help manage that with patients and reduce their out-of-pocket expenses even further. That's a major, major advantage improvement for Part D drugs that removes a disadvantage that has hindered Part D drug out-of-pocket expenses for years. So we think that's another tailwind for WAINUA for both polyneuropathy as well for cardiomyopathy.

Olezarsen, the second asset that you highlighted here, remind us on the timing and the commercial strategy for the drug in the 2 indications?

Yes. So familial chylomicronemia syndrome, FCS, as I said earlier, is -- we had remarkable Phase III data in FCS with a very clean safety profile. We presented at ACC and published in New England Journal. Not only do we show substantial reductions in triglycerides in FCS patients. This is a severe disease, a rare disease, genetic disease that patients have all kinds of comorbidities but the biggest risk is the risk of a potentially fatal acute pancreatitis event. If it's not fatal, it lands in almost always in ICU for extended periods of time. We not only showed substantial reductions in triglycerides but also a substantial reduction in acute pancreatitis events, first time ever demonstrated. We are pushing for that all to be in the label, the AP, the triglycerides and so forth, and we're looking forward to hearing from the FDA soon on our submission and with the potential for priority review, which would set us up for approval in December and then launch. That -- FCS is a stepping stone to a much larger indication related to severely elevated triglycerides, basically a common disease, highly prevalent disease that's just not genetic. FCS is genetic, they suffer from the same things, severe abdominal pain, hospitalization. I forgot to mention in the FCS trial more -- that we had a reduction in more than 90% in hospitalizations as well. And it wasn't just due to AT, it was due to all kinds of other problems that patients were suffering from. These patients suffer from the same thing with severe hypertriglyceridemia, millions of people in the United States. There are not effective treatments. Today, standard of care is fibrates and niacin maybe modest effects on triglyceride, no AP data. for FCS, fish oils are not -- are contraindicated because they can't take oil, they can't take oil like that, it will just exacerbate the disease anyway. We believe that the FCS is -- provides -- the positive data really provides meaningful read through to a positive readout sHTG. It's the same mechanism of action. We actually expect even greater triglyceride lowering in sHTG than FCS. We're -- although these patients have a slightly lower rate of acute pancreatitis events compared to FCS, we're -- our study is 10x the size. So we were able to collect all those AP events from a much bigger patient pool. And I can tell you that we're seeing blinded AP events in the study. And if FCS predicts sHTG, the vast majority of those AP events are going to be in the placebo group. This study is going really well. This is a blockbuster opportunity, a wholly owned program for Ionis, our first independent commercial launches in FCS and then sHTG to follow, and we're looking forward to Phase III data midyear next year.

Just to understand that the measures that payers are most focused on here with regard to both disease areas?

So to that question, that also has read-through to our markets, our commercial strategy. So -- there are 3 -- sHTG is defined, FCS is straightforward. I mean these patients -- there are no treatment options in the United States for FCS. It's severe disease. We know where these [Audio Gap] quickly. SHTG, there's 3 million people in the United States alone. That's defined as 500 milligrams per deciliter and above. But where acute pancreatitis and other comorbidities really kick in is 880 and above. That brings it down to about 1 million people in the United States. Based on all the research we've done has led to our commercial strategy. We have identified a subset of that million, if you will, a few hundred thousand patients. Where they are managed by what we refer to as aggressive treaters, early adopters, there are guidelines -- established guidelines for lowering triglycerides and these endocrinologists as well as cardiologists are convinced because they manage these patients all the time that they need better treatment options. And if some -- when a drug like olezarsen is available, they want to jump on it and get their patients on this treatment. They're convinced. They -- this alone, this group of early adopters who have -- or managing people with high triglycerides that haven't -- have had acute pancreatis events already, and they're managing people with high triglycerides who based on their experience with patients who have had AP events, they don't want their patients to have their first event. That alone is a blockbuster opportunity and we have first-mover advantage. And from there, we then build the market out. We then get out to those less aggressive treaters. and we educate them on why they need to build out this market opportunity and they need to treat their patients and then to more patients and more treatments. So we're really excited about this opportunity. And like I said, having first-mover advantage with a really exciting drug like olezarsen, we think, positions us really well.

Because we're on the cardiovascular vertical, your Lp(a) program with Novartis, help us understand how -- or the translation here from the knockdown of Lp(a) to functional outcomes and the ability to show that through this trial?

Yes. I mean this is another potential breakthrough for cardiovascular diseases. I mean, we knew for cardiomyopathy olezarsen for SHTG are the same break -- potential breakthroughs. Pelacarsen is another one. This is a [ former ] cardiovascular disease atherosclerosis cause strokes, heart attacks for patients with highly elevated risk factor called lipoprotein (a), and there are no effective treatments for it today. Patients can be in their 20s, 30s, 40s, suffering from an event. They're nondiabetic, their normal cholesterol, it's due to high Lp(a). The epidemiology is incredibly strong that if you are above a threshold of Lp(a), above 50 milligrams per deciliter you're at risk and the higher the Lp(a), the greater the risk. In a Phase II study that we conducted several years ago, we took those same exact patients that are in our Phase III trial actually, normal cholesterol, nondiabetic, nonobese, high Lp(a), they've already had an event, and we were able to normalize 98% plus of those patients to get them into the normal range, which we believe will then translate to outcome data because they're now normal. Based on that data, Novartis has licensed the program, conducted a Phase III outcome trial called HORIZON. More than 8,000 patients have been in -- now been fully enrolled for a couple of years and that data is going to read out next year. I mean this is -- could be another landmark study from a drug that was conceived and discovered forward by Ionis for cardiovascular disease. So it will be the first test of this hypothesis. The epidemiology data is super strong. Now this is the first pharmacological inhibitor on whether or not we can normalize and protect patients from this form of cardiovascular disease.

We also spoke earlier about the hereditary program. Maybe help us understand on approval where this would fit in the treatment paradigm and who the early adopters would be in the context of competitive dynamics?

Yes. Very different than WAINUA, very different than pelacarsen, very different than olezarsen. Hereditary angioedema prophylaxis is -- there are lots of treatments available in the U.S., 70% of patients in the U.S. are on prophylactic treatment. Mostly lanadelumab, there's also ORLADEYO. What we -- and outside the U.S., it's mostly on-demand treatment, right? So that's a market that has to be developed. But in the U.S., it's a switch market. Well, we reported, we had great Phase II data showing remarkable efficacy and great safety in the Phase II, which caused us to move to Phase III development. Recognizing that this was a switch on in the United States, we did our market research and what we learned was that patients want better efficacy. There's a lot of attacks, they want better tolerability. The treatments that they are available today are not well -- as well tolerated as they want them to be, and they want better convenience. With the standard subcu [Audio Gap] with the potential to go to every 4 weeks, but you lose efficacy. So it's mostly every 2 weeks. Donidalorsen was set up to fit all of that -- to address all of that with great efficacy, tolerability and convenience as either once per month or once every 2 months injection. We reported in EAACI a couple of weeks ago was -- Phase III data was great, excellent efficacy, great compliance, great tolerability. The open-label extension data for up to a year of treatment showed patients were continuing to improve monthly by monthly with protection on the order of 90% plus reduction in HAE attacks, for both monthly and bimonthly with the long-term treatment. And then what was really novel was the Switch study that we conducted, recognizing that this was a Switch market in the U.S. We did a Switch study, in which in a separate cohort, we actually invited patients that were on lanadelumab or ORLADEYO, CINRYZE to enter a clinical trial in which the -- we switched him over and we did that in a thoughtful manner to protect them from losing protection for a period of time, no gaps in protection. And we conducted that study. First, patients enrolled into the study showing that they're willing to switch for better -- they're looking for better treatments. No gaps in protection. And what was really remarkable was not only to protect them from gaps in protection and gaps in coverage of their HAE attacks, they actually showed improvement compared to their baseline values with a mean further reduction of 65% in HAE attacks that was for some of the medicines it was 75% but it was in that 65% to 75%. So they were getting better benefit. And then when we conducted -- we had conducted an independent assessment survey for those patients asking them what do you prefer? 85% of the patients preferred donidalorsen over their previous prophylactic treatment, and then why? The same 3 reasons I gave you. Some patients said, because it's more efficacious. Some patients said, it's better tolerated. And some patients said, I love the convenience of once per month subcutaneous self-administration. We didn't have bimonthly in the Switch study, only in the Phase III study in the open label. So that is going to add convenience when we expect to get to the market with the bimonthly option as well as the monthly. So that's where we are with donidalorsen and we plan to submit the NDA second half of this year with a potential approval next year with launch.

The neurology platform here, maybe walk us through how you're thinking about the Biogen partnership with regard to programs and development there and then programs you look forward to taking through development independently whether Angelman is actually one of those?

Yes. So we have a -- we believe we have a leading neurology -- CNS neurology platform with a validated platform, SPINRAZA for SMA has approved, QALSODY for SOD1-ALS is approved. We've had clinical proof of concept demonstrated for our tau program in Alzheimer's disease and now Angelman, although we haven't presented the data yet, we're going to do that in July. We have proof of concept in Angelman's as well, and we have half a dozen other programs in clinical development today. We have a great partnership with Biogen. They're doing a great job with QALSODY, with SPINRAZA, with the tau program and several other programs. Biogen had an option to license the program and for their own internal reasons, their own internal metrics, they chose not to take the Angelman program forward. Remember, this is a complicated Phase I/II study. It's an open-label study. A relatively small study, a complicated disease, but a disease where there's a huge unmet need bigger than spinal muscular atrophy, bigger than SMA, but it's complicated for whatever reasons, their internal metrics didn't click on certain things. I can tell you that they -- we were in alignment, that there was meaningful clinical benefit demonstrated in the Phase I/II study and that the study should go forward to Phase III but it just didn't fit their internal metrics. That's great for Ionis because this is a big opportunity for our wholly-owned neurology pipeline. And to answer your question, yes, we're taking this one ourselves. And we expect Angelman's to be the centerpiece in our wholly-owned neurology pipeline. We know how to develop neurology drugs. We have a proven platform and now we have our true center potential blockbuster opportunity. We're going to present the data at the Angelman's Syndrome Foundation Meeting in July, and we're very much looking forward to that.

And Brett, maybe a last question here. You have brought in some next-generation technologies, maybe speak to us about the integration there and how you're thinking about external BD, but also the path to profitability and viewpoint of sustainable growth.

Yes. So when I moved into the CEO role in 2020, I made 2 big changes. One was to fully integrate Ionis, so that we commercialize and prioritize our wholly owned pipeline and commercialize drugs of our own. You just heard all about that. We're now launched in our COCO with AZ and we're progressing to our independent commercial launches, and the other was to expand and diversify our technology. And we've in-licensed several platforms for -- to penetrate and open up new tissues such as overcoming the blood-brain barrier for CNS diseases. We can go to subcutaneous or IV routes, opening up muscle. The first programs are going to be moving to development next year probably, if not the end of this year and all that's paying out. Business development, I think we're through -- I don't think we need to in-license anything more. I think what we have everything we need right now. I also mentioned, we're also developing siRNAs as well as ASO technology for different indications where it applies best. Those are moving into clinical testing as well and these programs are approaching the clinic. We think we have everything we need to be the leading genetic medicines company using ASO, siRNA and even now gene editing. We are partnered with Metagenomi. With respect to our financial situation, we're very well capitalized today. We have a strong position to be able to make the investments. We need to make to ensure success over the foreseeable future. With that said, we are in a period of investment, right? We're now building our first field sales team in our history. We're preparing to launch our first independent launches, and we're wrapping up some very big 3 Phase III studies. The Angelman's study will be smaller than the ones we have going on now but we're ramping those up but we're still in a period of investment. And what you can see is that with the launch of WAINUA, then olezarsen towards the end of next year and then pelacarsen, any subset of these hit the mark are successful. What you can see us set up to be is really in a great position from a financial position with respect to revenue growth and sustainable revenue growth not too far down the road. So stay tuned as these programs read out.

So with that, Brett, thank you so much.

Thank you. Pleasure.