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

Well, good morning, and thank you for joining us on day 3 of Guggenheim's Inaugural Healthcare Innovations Conference. I am Debjit, one of therapeutic analyst. And joining me on stage is Brett Monia, President and CEO of Ionis Pharma. Thank you so much, Brett.

Thank you, Debjit. Pleased to be here.

I'd love to start with a very, very brief intro given the breadth and scope of the pipeline and then take it from there.

Sure, happy to. So Ionis is a leading genetic medicines company focused on RNA as our drug target. We've had a great deal of success over the last 2 to 3 years in the pipeline, several positive Phase III readouts as well as some recent drug approvals. And we're positioned to do more of the same for years to come with a Phase III pipeline that boasts 9 medicines in Phase III development across 11 indications, all of which are progressing on track to produce a steady cadence of Phase III readouts and potential launches for years to come. So we're really pleased with the progress of the company and the progress of our platform.

All right. So like you said, multiple positive Phase III readouts, a lot has gone right for the company, but somehow the stock has underperformed. So what changes in '25? And how do you fix it?

Debjit, we're on the -- Ionis is on the cusp of a new era for the company. We had the approval of WAINUA late last year. That approval now sets us up with 5 approved medicines that are on the market today. We expect a sixth medicine, olezarsen for FCS, approved in December of this year; and then donidalorsen for hereditary angioedema next year. And olezarsen and donidalorsen represents -- are a big deal for Ionis. All of our medicines are a big deal, but these 2 represent our first 2 independent commercial launches for the company in our rich 35-year history. And this really fulfills the promise that I made when I became the CEO in 2020 when I said that Ionis to really drive value for all stakeholders, including our shareholders, was that we needed to become a leading fully integrated biotechnology company and to deliver and retain value, to deliver value to retain value by keeping the medicines ourselves. And we're on the verge of doing exactly that. And we're just at the beginning, Debjit. We're looking at a steady cadence of medicines, both wholly owned as well as from our partner programs, reading out and launching; in aggregate, multibillion-dollar commercial opportunities for these medicines that are just on the horizon that are coming. These are -- this is what investors are looking for to drive value. We're looking at these upcoming launches to produce substantial revenue growth and very, very positive cash flow for the company. And that's what investors are looking for, and that's what we're positioned to deliver. And we think that, that will drive value.

Got it. So traditionally an antisense oligonucleotide company, but I believe you've made substantial strides on the siRNA side. When can we see the first iterative advances moving away -- not moving away, but adding siRNA to the platform?

Yes. So I purposely highlighted as and referred to Ionis as a genetic medicines company in my introduction, not as just an antisense company. And that's because we are really expanding and diversifying our technological capabilities vastly since I became the CEO. Before we get to siRNA, let me just touch on antisense oligonucleotides. We've made tremendous strides in advancing medicinal chemistry to not only improve potency, but also to improve durability for antisense oligonucleotides, whether administered to the CNS or systemically. And in fact, our first new backbone chemistry is now in clinical testing for a CNS disease for downs patients with dementia. And this is our MsPA backbone that we think will deliver semiannual or annual dosing using intrathecal delivery. On the siRNA front, we are using Ionis medicinal chemistry and know-how to deliver Ionis siRNAs for both local administration as well as for systemic applications. And we have 2 siRNAs in development today, in IND supporting tox studies and one is in clinical testing today. But also on the technology side, I also want to highlight the work we're doing to open up new tissues for drug discovery to expand our therapeutic scope. We're making great strides in targeting skeletal muscle and cardiac myocytes for heart failure, for skeletal muscle disorders. We're expecting our first candidates to reach development next year for both skeletal muscle as well as heart failure. And we're making great strides also in expanding our leadership in CNS diseases by opening up the blood-brain barrier. So not only are we developing new chemistries that are allowing us to go to semiannual or annual dosing intrathecally for CNS diseases, we're on the cusp of delivering our first molecules into development next year that will be delivered to the CNS using subcutaneous or intravenous administration. So across the board, the platform, the technology is advancing really well. And we're agnostic to the mechanisms of action, siRNA, ASO, whatever is the best approach, whatever is the best mechanism for a particular drug target for a particular disease indication is what we are capable of delivering and is what we will deliver.

So let me make sure I got that right. CNS penetrant medicines delivered either intrathecally -- not, sorry, intrathecally, but subcutaneously or intravenously and not intrathecally.

Yes, that's correct. Also there's 2 ways to tackle the CNS for delivery. It's either dosed less frequently for intrathecally, which we're on the -- we're delivering -- we think we have on the cusp of semiannual and annual dosing or systemically subcutaneously or intravenously. Correct.

Got it. So olezarsen PDUFA date is approaching. No showstoppers on CMC or anything?

No, things are going very well. We have drug product ready to go. Our supply chain is ready to go. Our commercial team is in place. Our medical team has been in the field for 2 to 3 years now. We've identified those treaters that are seeing these patients, that are managing these patients. And we are exactly where we need to be to launch olezarsen for FCS as soon as we get approval. Our PDUFA date is December 19, and we will be ready to go.

And how are you thinking about positioning olezarsen first in FCS and then in the broader SHTG segment and differentiate versus competition, let's say, you'll have a competitive threat in FCS within a year?

We have a great drug. Olezarsen has demonstrated substantial reductions in triglycerides in our Phase III trial, substantial reductions in acute pancreatitis, substantial reductions, greater than 90% reductions in hospitalizations in our Phase III trial and very impressive improvements in quality of life. So we got the profile of the drug. And we're going to take advantage of our first-to-market advantage for FCS. We have a significant advantage with respect to reaching the market first. And we're ready to go. And there are no treatment options available in the United States today for FCS. And we think that that's going to be a very significant advantage. For the much broader population, severe hypertriglyceridemia, a disease that afflicts millions of people in the United States alone, puts them at high risk for acute pancreatitis and other comorbidities due to severely elevated triglycerides, we have multiple years head-start advantage to be the first to reach this market in the United States. And this opportunity for SHTG is a blockbuster opportunity, so really just to take advantage of our leadership and our lead in this space.

So let's talk about FCS first. It's a relatively rare disease. Given the severity of the underlying condition, do you think the patients are already identified and housed at specialized lipid treatment centers and the uptake should be relatively quickly?

Yes. FCS is a rare disease, as we've said, probably a couple of thousand in the United States. And there are no treatment options available today. The biggest risk that these patients suffer is the risk of a potentially fatal acute pancreatitis attack. And if it's not fatal, it generally puts them in the ICU for weeks. And they have other comorbidities as well. We certainly -- and as I said earlier, we've been in the field. We've identified those treaters, the specialty lipidologists that see these patients and manage these patients. And we know where the centers are. We know where the treaters are that manage these patients. And we do think that there will be a relatively quick uptake of FCS patients going on to olezarsen from our ongoing open-label extension study, our expanded access program and also, in general, those patients that have been identified today by these lipid specialists. With that said, there's still a lot of work to be done to educate HCPs on what an FCS patient looks like, on how to genetically test for FCS or how to clinically diagnose for FCS. And there's still going to be quite a bit of work there to do to identify patients and just roll out this program. So we're expecting a fairly quick uptake on identified patients today, but then there's going to be more work to do to really round out this whole population.

Got it. And you sort of mentioned SHTG in the broader segment. This could be a blockbuster drug, but somehow the Street has still not bought into it, right? Because otherwise, you should have been trading at a very different level. So what's that disconnect between what the company thinks from its market research versus the perception on the Street?

Hard to say. What we know is that the very positive FCS outcome in our Phase III BALANCE study really derisks the SHTG Phase III outcome that we're expecting in the second half of next year. And this really does represent a blockbuster opportunity. There are no effective treatments today to manage severely elevated triglycerides, and these patients suffer from the same issues that I just highlighted for FCS. It's just it's a much larger patient population. I think one of the things that I think that is misunderstood on the Street about SHTG is just the role of triglycerides in human diseases. There's a misunderstanding that severely elevated triglyceride -- the need to manage severely elevated triglycerides is somehow related to a cardiovascular outcome that's necessary to demonstrate benefit. And this really isn't a cardiovascular disease. It's a metabolic disease. Again, patients are at severe risk for acute pancreatitis and other comorbidities. And that's really the aspect of the disease we're trying to correct. So we made great progress, but we have a lot more work to do to educate people on the unmet need here and the type of disease we're tackling. And we -- like I said, we're going to be first to market here in SHTG, and we're going to round out and establish this market.

Just to finish up on olezarsen, from a label perspective, what are you expecting for FCS, either from a genetic testing perspective or the breadth of the label? And do you think you'll get the pancreatitis on the label as well?

Yes. So I got to be careful because we are in the midst of label discussions now with the FDA. We are also under review in Europe for FCS, for olezarsen. But label conversations, discussions are going very well. We're expecting -- we achieved priority review from the FDA for this -- for olezarsen in FCS. And in that priority review, the indication was for adult FCS patients as an adjunct to diet. And there's nothing that we've had in the label discussions to date that makes us think that that's going to change in any way. So it's a broad label, not a genetic requirement -- testing requirement for the label. However, this is a rare disease drug, and it will likely command rare disease pricing. And as such, payers, we believe, will be very careful on what they will reimburse with respect to clearly defining an FCS patient as an FCS patient and not sort of migrating into other types of severely elevated triglycerides like SHTG. Therefore, we think that payers will require -- will have more stringency on how to define FCS. And there will be some requirements for genetic testing by payers. And if you have an indeterminant genetic test, that means you can't have a definitive outcome in that genetic test, they will require criteria that's published that defines an FCS patient clinically. And we strongly believe that, that will be harmonized across all drugs that are approved for FCS.

Got it. So let's switch to doni. That will be a second launch probably in the second half of 2025. How are you positioned for -- to launch that in a relatively competitive market?

Yes. Very different commercial strategy for donidalorsen in hereditary angioedema versus olezarsen. As I said, olezarsen in FCS is first to market. Donidalorsen as a prophylactic for hereditary angioedema will be coming into a market with several treatments that are already established in the United States today. However, we think donidalorsen has tremendous potential in HAE, and that is because patients are still unsatisfied with the current treatments. They're unsatisfied for several reasons. One is that they are still experiencing attacks, HAE attacks that can be unpredictable and it can be severe. Secondly, existing drugs are not convenient for patients. They have to dose them frequently subcutaneously mainly or orally, but the oral drugs then move into my third aspect that they want better treatment options is tolerability. They want better tolerability. Whether we're dealing with an oral drug that's on the market or a subcutaneous drug that's on the market, tolerability remains a significant issue for these patients. What evidence do we have that patients are looking for better treatments? Well, we're seeing patients switch. We're seeing patients switch with existing treatments today. And we're also seeing patients switch in a prospective switch study that we conducted in the clinic in which we invited patients that were on existing prophylactic treatments to come on to a trial and go on to donidalorsen. And we were able to enroll the study fast, showing that patients are willing to switch and try better -- potentially better treatment options. And we were pleased not only that patients stayed on treatment, but that we were able to improve and reduce their attack rates by a further 62% compared to their baseline attack rates coming into the study. And in an independently conducted survey of those patients, more than 80% of the patients said they preferred donidalorsen over their existing treatment. So patients are willing to switch, and we think we have the profile that is going to really excite patients to switch to donidalorsen. It's a different market than being first to market. So we're going to have a lot of work to do to get the word out on donidalorsen, but we think that we're going to be successful.

And do you think the switch data are going to be reflected in the label to make it easier post launch, especially laying out how you transition away from whatever therapy you're on to doni?

Yes, it's an important point. So our NDA is now accepted with a PDUFA date of August 21, 2025. And as you said in your intro to this topic, we will launch in the second half of next year, assuming approval. We do -- we will push for and we think it's reasonable to include the switch data in the label because what it does is it provides a way, a method, an algorithm on how to safely switch patients from existing treatments, that is to prevent gaps in protection to make sure you have proper coverage and protection. That is how long do you need to continue on your current treatment before you stop it and donidalorsen is providing full protection. So we do think that that's a safety -- a significant safety method that should be in the label for patients that are switching, and we will certainly push for it. And we're reasonably confident it will be successful.

And if I understand it correctly, there is a life cycle management product for doni, which is probably more of an siRNA backbone?

Yes. We are -- we have an outstanding research organization at Ionis, leading the way in oligonucleotide medicinal chemistry, ASO, siRNA. We touched on it before, new tissues, blood-brain barrier, et cetera. And we are committed to protecting the franchises we create, established with new molecules, follow-ons and so forth as we continue to advance the technology forward. And the efficacy that donidalorsen has demonstrated in HAE in our long-term extension treatment, pushing 3 years of treatment, we're looking at 90%-plus protection in reducing HAE attacks with either once per month or every 2-month dosing, subcutaneous self-administration. So that's looking really good. And as far as a follow-on molecule, we have a lot of chemistries that are allowing us to get to semiannual or maybe annual dosing. And we think that, that will further add to the monthly, bimonthly dosing that's very attractive to patients today with even more convenience. So stay tuned for that. We're making advancements across the platform with new chemistries, but donidalorsen follow-on molecule is certainly one of them.

Awesome. So switching to pelacarsen. There was the big HORIZON Lp(a) study readout middle of '25 or approximately. How are you feeling about the study based on your discussions with partner Novartis?

Yes. So Lp(a)-driven cardiovascular disease, one of the largest -- probably the largest unmet medical need in cardiovascular disease today. It's an independent risk factor. It's accepted to be an independent risk factor by the cardiovascular community. There are no effective treatment options for this disease that afflicts 8 million to 10 million people globally. This is a landmark study, Debjit. The first-ever treatment to lower Lp(a) in this patient population. In our Phase II study, we were able to normalize Lp(a) in patients with CBD due to high Lp(a), 98% of the patients were able to normalize their Lp(a). This is a cardiovascular outcome trial, more than 8,000 patients, been going on for 4 years now, and the results will be really, really exciting. Our partner, Novartis, is very excited about the program. They like what they're seeing with respect to the conduct of the study. And they're committed to seeing this study -- they continue to say that the study will read out next year. And if positive, they will also submit for regulatory approval next year.

So given the scope of the indication, I believe you're also working with Novartis on a follow-on potential in siRNA molecule. How quickly does that program come to maturity if the HORIZON Lp(a) study is successful? And from a positioning perspective, is that going more in the frontline preventative setting? Or would you again start in an ACVD population?

Yes. Much like the discussion we just had about the follow-on to donidalorsen, we are well positioned to deliver a molecule that can get to less-frequent dosing for Lp(a) as well, semiannual or annual dosing. As I said, we're not really looking to improve on efficacy with more than 98% of the patients normalized in our Phase II study. We have the efficacy we think we need. But less-frequent dosing is certainly would be an attraction for more mild populations. We've delivered the -- we expanded our partnership last year with Novartis to -- they came to us and asked for a follow-on molecule to do exactly that, and we delivered it, Debjit. It's in their hands, and they accepted the molecule. They're very pleased with the data we generated. It ticked every box in our molecule target product profile, and we're ready to roll. So it's in their hands, and they're now preparing for IND supporting toxicology studies. As far as the indications that they would develop that for, I don't want to get ahead of our partner and speculate as to what they would be developing that for. But certainly, you can use your imagination, and they certainly are excited about this program.

Got it. Let's touch upon the Angelman program because you just had the regulatory agreement, which looks to be very different from your competitor's program. Maybe touch upon that one and just think about positioning how quickly you can move that study currently stated to start early next year.

Yes. So we're really excited about the Phase II data we announced at the ASF meeting in July. We demonstrated really strong evidence of clinical benefit across all endpoints, including communication, cognition and motor function. We came to the FDA with our end of Phase II meeting and our proposed Phase III trial design, and we achieved everything we sought out to achieve with very -- with no controversy. Our trial design will include 2 dose levels, which we think is really important to enhance probability for success, especially since we are looking at a wide patient population, a broad patient population, not only children and adolescents, but also adults. And we demonstrated benefit across all these age groups in our Phase II HALOS study. And that is also a good reason to have more than one dose because one dose may benefit children better more than adults and vice versa. So we think that, that really enhances our probabilities of success. It's about a 1-year study, 3 cohorts, placebo, mid-dose and a high dose, 1:1:1 randomization. So patients have 2/3 of opportunity to have a therapeutic dose in the trial, and I think patients will like that as well. It's a placebo-controlled trial, not a sham-controlled trial. And we also think that that's very important because placebo-controlled trials are the gold standard for trial integrity in the eyes of regulators. And the FDA, although originally recommending a sham control in the study, quickly came around to our view that a placebo-controlled trial is the proper way to conduct a Phase III trial of this importance. And all I wanted to see was our safety data for intrathecal administration. We provided our thousands of patient database, demonstrating safety with our platform, and they were convinced and fully supportive of our trial design. So we're going to get that study started in the first half of next year, and we're very much looking forward to it.

Unfortunately, the gatekeepers are telling us you're talking too long. So Brett, I wish I could touch on a couple of other things, but I can't. Thank you so much, and I appreciate your time today.

Thank you, Debjit. It was a pleasure.