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

Great. Good morning, everyone. Welcome. My name is Jess Fye, I'm a biotech analyst at JPMorgan, and we're continuing the 43rd Annual Healthcare Conference today with Ionis. First, you're going to hear a presentation from the company, and then we're going to go into some Q&A. If you're in the audience and you've got a question, raise your hand and someone will bring you a microphone. Or alternatively, you can send them to me. We have a portal, and I'll get them on the iPad up here. So with that, let me pass it over to Ionis' CEO, Brett Monia.

Thank you, Jess. Good morning, everybody. Thanks for joining today for my presentation. I'm really, really thrilled to be presenting to you today the remarkable progress we're making at Ionis, and a vision towards an even more remarkable and exciting future for the company. I will be making forward-looking statements during the course of my presentation. And although I will be focused on my -- focusing my presentation on the current state of Ionis, a really exciting time for the company and a vision forward, I will also be touching in the beginning of my presentation on a little touching back to a little bit of history for the company to provide context. But -- and in that vein, let me start here. Ionis was pioneered to create a new field based on RNA-targeting therapeutics, starting new RNA using oligonucleotides. Antisense oligonucleotides originally, and then this has expanded to be so much more. And we are highly successful, highly successful. And we did that by investigating all aspects of oligonucleotide therapeutics, including creating the industry-leading capabilities in medicinal chemistry that gave these products their drug-like properties that allow them to be attractive and effective medicines for patients. And we also led and continue to lead the way in manufacturing capabilities. We optimize in validated distribution, understanding of how these drugs get into cells, how they're distributed, what are the most sensitive cell types. And in that way, in that manner, we actually were the first to validate the liver hepatocyte as a highly sensitive organ for oligonucleotide therapeutics. And then that followed with our ability and our validation of the central nervous system, CNS delivery, using oligonucleotide therapeutics. We optimize and validated multiple mechanisms of action for oligonucleotide therapeutics, including the RNase H mechanism of action, which is basically a mechanism that involves the reduction of targeted RNA to block the production of toxic proteins. And that mechanism has been utilized by breakthrough treatments, breakthrough treatments like QALSODY for SOD1 ALS, like TRYNGOLZA for familial chylomicronemia syndrome, and WAINUA for hereditary TTR polyneuropathy. And then of course, we've also been able to validate other mechanisms, like splicing, controlled splicing, which led to the breakthrough treatment that we conceived and discovered at Ionis, SPINRAZA for spinal muscular atrophy. All of this has led to -- based on all of this, we have led the way in discovering and developing first-in-class medicines for a whole range of diseases, having provided benefit to tens and tens of thousand patients already today. And we're positioned, we're poised, to help millions of people globally. 5 years ago, I assumed the role as CEO of Ionis. And that was in January, and I gave my presentation right here at JPMorgan Healthcare Conference in January 2020. And what I said at that presentation, during that -- in my initial presentation as CEO, was that Ionis is highly recognized as a highly innovative company, research, well known for cutting-edge research and early development. And I also -- and I emphasized that, that would not change for the company. That's our bread and butter. That's our strength. However, I also recognized that we needed to do more to drive value, value for shareholders, for patients, for stakeholders. And I outlined 4 key objectives to achieve that value, and they're shown here. First, to move beyond our original business model, which is a model that we partnered all of our programs. We partnered in early development, research phase. And we let the other companies take our drugs that we conceive and discover to commercialization. Felt we needed to change that. We needed to prioritize and advance our wholly owned pipeline, keep these drugs for commercial success ourselves. We needed to build our commercial capabilities to eventually launch our own products. We needed to expand and diversify our technology. A lot of competition emerged as we -- after we pioneered this field and created this field of oligonucleotide therapeutics. We needed to address that competition by expanding and diversifying our technology to extend our leadership position in the field we created. And then finally, we needed to commercialize our own products, products that we conceive, that we discover ourselves, to bring those medicines to market to retain the full value, the full value of the medicines we had discovered. I'm pleased to report today that we've achieved essentially all of these core objectives over this past 5 years. We have one of the most exciting wholly owned pipelines today at Ionis with 10 wholly owned medicines, all of which are -- have potential for transformational -- have transformational potential that are in our mid- and our late-stage pipeline. We've built in a highly innovative, highly experienced and scalable commercial organization that is in place to launch our products from our wholly owned pipeline. We've expanded and diversified our technology in many ways through medicinal chemistry and in other ways. And a lot of the advancements we've made in technology are now bearing fruit. A lot of the medicines that have been recently approved over the last 2 years bear the benefits of the advancements we -- the investments we've made in science and technology. And we are now a fully integrated commercial stage biotechnology company with our first independent commercial launch, TRYNGOLZA for familial chylomicronemia syndrome, now underway following the December 19th approval, the first-ever approved -- the first-ever medicine approved by the FDA in the United States for FCS. And we anticipate 3 additional launches, independent launches, over the next 3 years. As I said, we built a commercial organization. That commercial organization is in place. It's an innovative commercial organization with a lot of experience. And of course, we have now achieved, we have put in place, all of the necessary functions that are required for successfully commercializing your own products. That includes, of course, market access, analytics and so on. Patient service program that we call at Ionis the Ionis Every Step program, supporting patients, from diagnosis, to understanding their disease, to treatment, getting on drug, and getting reimbursed. Operations. New product strategy to prioritize our pipelines ourselves. Innovative tools to reach patients and HCPs, like omnichannel, marketing. And of course now, we have our first customer-facing team in the field that is delivering TRYNGOLZA for familial chylomicronemia syndrome. As we set out on this journey in 2020, we set out on a planned, measured approach to become a fully integrated commercial-stage biotechnology company, step by step. Building on the success that we had in our rich history of discovering and developing transformational medicines, like SPINRAZA for SMA, like QALSODY, the first-ever approved medicine for a genetic cause of ALS. Building on that innovation, our first step to full integration was to do -- it was to complete a transaction that involved a co-commercialization partnership with a trusted partner. And that first medicine was WAINUA for TTR amyloidosis, the first indication, hereditary TTR amyloidosis for polyneuropathy. And that co-commercialization partner is AstraZeneca. It's our first Ionis-branded medicine launched in 2023, and that launch is off to a great, great start. And then our first independent launch, TRYNGOLZA. First independent launch, first FDA-approved medicine for familial chylomicronemia syndrome, approved in December of last year and now launched in 2024. And now that launch is underway and going very well. And there's so much more to come from our wholly owned pipeline and our partnered pipeline, putting us in position for substantial, substantial revenue growth. And when I say there's a whole lot more coming, I'm not kidding. This is what the potential near-term commercial launches look like for Ionis' wholly owned pipeline as well as our partnered pipeline. Shown in orange stars are programs that are wholly owned. In blue are partner programs. And those that have both gold and blue represents our co-commercialization partnership. The anchor program is WAINUA for TTR polyneuropathy. As I mentioned, the launch is off to a great start in our first-ever co-commercialization partnership. TRYNGOLZA, our first independent commercial launch, now underway in the United States with an anticipated launch in Europe later this year. Coming quickly behind TRYNGOLZA is our first -- is our second independent commercial launch. Donidalorsen is a preferred -- is a potential highly preferred prophylactic treatment for hereditary angioedema with a PDUFA date of August 21 of this year. And assuming an on-time approval, launch this year. Following right behind donidalorsen from our wholly owned pipeline is the second indication for TRYNGOLZA, the generic name is olezarsen, for a much more highly prevalent disease called severe hypertriglyceridemia, a disease in which there are no effective treatment options available today, a disease that afflicts millions of people in the United States alone, with Phase III data from that Phase III sHTG program anticipated for the second half of this year. And then more, particularly from our leading CNS platform, our wholly owned CNS platform, Alexander disease. And then our Angelman Syndrome program, which we anticipate to start -- we expect to start and will start in the first half of -- Phase III development in the first half of this year. And then you can see from our partnered program. Pelacarsen for Lp(a)-driven cardiovascular disease, a very large unmet need. Chronic HBV, the bepirovirsen program with GSK. IgA nephropathy and more. These anticipated approvals, anticipated launches are exciting in their own right. We anticipate 4 independent commercial launches over the next 3 years from the wholly owned pipeline, 4 key partner launches over the next 3 years. Remarkable in their own right. But what's really, really remarkable is the millions of people that we are positioned to benefit globally from the medicines that we can conceive, discover, and we bring to the market through partnerships and from our wholly owned pipeline. Diseases for -- that are for severe rare indications, like ALS, like FCS, like hereditary angioedema, and more; and for highly, highly prevalent diseases, like severe hypertriglyceridemia, Lp(a)-driven cardiovascular disease, and chronic HBV. Millions of people waiting for the treatments that we bring forward to the market. And not only are we helping millions of people, not only are we anticipating all of these approvals and launches over the next few years. This also sets us up remarkably well for substantial revenue growth in the next few years. This is what the partner pipeline looks like today, and the anticipated launches, anchored by SPINRAZA for spinal muscular atrophy, breakthrough treatment for SMA, QALSODY for SOD1 ALS, and now WAINUA for hereditary TTR polyneuropathy. Following these programs, we're looking forward to the anticipated launch of other programs. WAINUA for the much larger indication, TTR cardiomyopathy, with Phase III data in the second half of 2026. Our IgA nephropathy program, Factor B targeting with our partner, Roche. And then Bepirovirsen for chronic HBV. And then our tau program, a really exciting program for Alzheimer's disease, which we showed in our Phase II study that we could actually reverse the pathology and provide evidence of improved cognition by targeting intracellular and extracellular tau with our -- for the medicine we brought forward and now have partnered with Biogen. All of this from our partnered programs are anticipated to drive in excess of $2 billion of annual peak royalties from these programs alone. And that doesn't even include the milestones that are associated with these programs that are substantial, in excess of $3 billion for pelacarsen and WAINUA alone. And what's really exciting is what's coming from the wholly owned pipeline, shown here in red. Again, TRYNGOLZA is now launched, and it sets the stage for the rest of the anticipated launches coming forward. Donidalorsen for hereditary angioedema. Again, with a PDUFA date in August of this year and anticipated launch, our second independent launch for -- which will be for hereditary angioedema. And then TRYNGOLZA for the much larger indication, as I mentioned, for severe hypertriglyceridemia. Phase III data this year. And then a whole host of medicines that we anticipate to be launched in the next few years from our industry-leading CNS platform that delivered medicines like SPINRAZA and QALSODY and tau for Alzheimer's disease, and so much more. Anchored by our Angelman syndrome program, which we expect to start Phase III development this year. Shown on this slide are the anticipated revenue that we expect from our wholly owned pipeline for just the next few years in excess of $3 billion in peak revenue potential. And when you combine this, you can do the math, what we're looking at is in excess of $5 billion in anticipated peak product revenue based on our internal programs as well as on the royalties from our partnered programs. This is what's going to drive our goal to achieve positive cash flow in the next few years. And that -- and what you can see on this slide are the 3 components that is going to drive positive cash flow. First, we have a steady stream of R&D revenue from our partners, milestones and so forth. That's significant, and that will continue as shown in light blue on this slide. And then shown in dark blue are the royalties and sales milestones that we anticipate from our partnered pipeline over the next few years. And then product revenue, product revenue from the Ionis wholly owned pipeline. We're looking forward to this. This is a top objective for the company, to achieve cash flow positive and sustained top line revenue growth over and over again on an annual basis. In the beginning of my presentation, I highlighted the importance of Ionis to get -- to accelerate value for all stakeholders by building our wholly owned pipeline, by building our commercial capabilities. I also highlighted that we were going to, and have invested heavily in, research and development to expand and diversify our technology, to extend our leadership position in RNA-targeted therapeutics. And that's going exceptionally well. We have now new chemistries using -- within -- using antisense oligonucleotide mechanisms that are new backbone chemistries, for example, that are improving potency, durability, so that we can dose far less frequently than we really have in the past. Also, Ionis invented chemistries for Ionis siRNAs, have now reached clinical testing, and there's a lot more coming. And we're making great progress in gene editing. Targeted delivery is going exceptionally well, opening up new tissues, like cardiac myocytes for heart failure indications, skeletal muscle for neuromuscular diseases. And what's really exciting is the work we're doing, and we're on the precipice of advancing new programs for CNS diseases. Not just by infrequent intrathecal dosing, which is how we're dosing now, but now maybe even systemic dosing using subcutaneous or intravenous administration by overcoming the blood-brain barrier. Stay tuned for that. All of this is positioned to strengthen our leadership in cardiovascular and neurological diseases, potentially other areas. And now after these years of investment over the last few years, we're now going to see the benefits of these investments reaching, or on the precipice of reaching, clinical testing. We expect to achieve clinical process and present proof of concept for our first Ionis-MsPA backbone chemistry this year. It's a part of our APP program in Down syndrome patients with dementia. Our first siRNA proof of concept will come out of the clinic this year. And we're expecting to advance our first Bicycle siRNAs into clinical testing this year for muscle targets, particularly the cardiac myocyte; and to initiate IND-enabling studies for neuromuscular targets, skeletal muscle; and our first blood-brain barrier candidate, with others overcoming the blood-brain barrier to follow. Not surprisingly, with all this progress that we're making and all the investments we've made to advance our technology and to commercialize our own drugs, 2025 is set up to be an exciting year, a year full of key value-driving events. The pipeline. Phase III development. We're anticipating 3 Phase III readouts this year. I already highlighted TRYNGOLZA, olezarsen, for severe hypertriglyceridemia in the second half of this year. Zilganersen to address a rare neurodevelopmental leukodystrophy called Alexander disease, Phase III data in the second half of this year. And pelacarsen for lipoprotein(a)-driven cardiovascular disease Phase III data this year. And we expect to expand our Phase III pipeline this year as well when we initiate, developed -- Phase III development our Angelman syndrome program, ION582, which will get started in the first half of this year. We also have mid-stage pipeline readouts. On the regulatory front, we're looking at the FDA approval of donidalorsen for hereditary angioedema, the European approval of TRYNGOLZA for FCS, and European and other territory approvals for WAINZUA, that's the name for WAINUA in Europe, for ATTR -- hereditary ATTR polyneuropathy. And of course the product launches: Donidalorsen for hereditary angioedema; TRYNGOLZA launch in the U.S. for FCS and in Europe for FCS; and WAINUA, the full year launch for WAINUA for ATTR variant polyneuropathy. So in closing, I think you see now why we're so excited at Ionis about all the great progress we've made over the last few years to drive accelerated value for the company and our vision for the future, which is very exciting. And we're very much looking forward to achieve that vision, and we're in a great position to do so. We have a proven and prolific discovery and development engine. Our pipeline is delivering across the board at all stages, CNS, cardiovascular and more. We have a scalable, highly experienced, innovative commercial organization now in place that's launched TRYNGOLZA and is going to launch the next wave of Ionis products. I've laid out for you a clear path to positive cash flow with top line revenue growth anticipated in the next few years. And importantly, very importantly of course, we are positioned to improve the lives of millions of people globally for rare diseases, for highly prevalent diseases, in which there are no meaningful treatment options available today. Before closing, I just want to acknowledge. It takes a great deal of many people to achieve everything we've achieved at Ionis over the last few years. I want to acknowledge the collaborators and researchers that we've done so much work with over the years, the investigators that run our clinical trials and are devoted to Ionis. The patients who participate in our clinical trials. And very importantly, all of the people at Ionis who work painstakingly, or persevere, to drive value for all stakeholders, to drive value for Ionis, for patients and so on, who work around the clock to do so. Thank you very much.

Maybe first, I'll take a question from the audience here. You talked at the beginning of the presentation about how the strategy of the company has changed under your leadership. So how are you thinking today about what assets you would still partner out versus keep in-house? And kind of what are the pros and cons of partnering assets outward?

Yes. So when we made the strategic decision to become a leading fully integrated commercial stage biotech company in 2020, we also inherited a big pipeline, right? And it was clear that, to be successful, we were going to have to move in this direction in a measured manner, carefully. We weren't going to -- all the programs that we're not partnered yet, we weren't going to keep, so we were going to have to focus. Focus is a key objective for the company and for us to -- in the programs we prioritize in our wholly owned pipeline. So partnering had to happen, and we've been very successful in partnering programs that we choose not to keep today. As we continue to do that and to prioritize our pipeline and focus it down to the programs that we think were going to bring the greatest value to the company, we also have to recognize that we have a highly prolific research organization. That research organization is focused on bringing forward programs that are intended to be kept, right? They're intended to be kept. So you're going to see less partnering in the future as we -- as our pipeline gets focused down. And as we -- as our research organization brings forward new medicines that are intended to be kept by Ionis. With that said, there are always exceptions and life is uncertain, and sometimes, there are reasons to partner a program or not. And I think the key thing is that what we really want to do is to build those synergies, right, to build common call points for the medicines we bring forward ourselves. And if we don't feel that a medicine that is going to achieve a synergy with programs coming behind it, we may choose to partner those programs. But those will certainly be the exception more than the rule.

And you talked about the goal of becoming cash flow positive over the coming years. And based on the slide, it looks like it's going to be very top line-driven. How do you see the company's cost structure evolving now that you do have multiple wholly owned products that you're going to be launching?

We're -- as I outlined, we are in a great position to -- with the anticipation of several launches, 4 independent launches over the next 3 years for our wholly owned pipeline and 4 key launches from our partner pipeline. We're also in a good capital -- our capital position today is -- capitalization is strong, but we still remain in a period of investment. Research and development is essentially at steady state. We don't see the need to grow that organization and still maintain our highly prolific R&D organization. We are going to have to grow our commercial organization in anticipation of the next launch, for example. We have everything in place for the TRYNGOLZA FCS launch now. We are going to have to invest a bit more for the donidalorsen launch later this year in HAE. And then, of course, we're going to have to invest in the much larger disease indication, severe hypertriglyceridemia, which we anticipate to launch next year. With that said, we don't really -- we expect modest growth in expenses. Single-digit growth in -- that's mostly driven by the commercial investments we're going to need to make to ensure that these launches are successful.

And you talked about a desire for new pipeline products to ideally have synergy with the portfolio ahead of them. How much synergy do you see across the kind of the first wave of commercial launches?

Synergies come in different forms. We have a great deal of synergy with what I refer to as sort of the backroom internal investments you need that supports all commercial launches, whether that's market access or patient service hubs and the like. From a therapeutic standpoint, call points, those kinds of things, where we see synergies. Well, there's a very significant synergy as we transition from FCS to severe hypertriglyceridemia, right? This is a disease that is caused by severely elevated triglycerides in both cases. And FCS is a launchpad to get us out there and expose and get TRYNGOLZA exposed for severe hypertriglyceridemia. These are patients in both cases that are treated by common call points, endocrinologists, lipidologists, pancreatologists, in some cases cardiologists. But these are the patients that are managed essentially by similar physician segment. Great synergies there. Our neurology pipeline that's growing rapidly. Our wholly owned neurology pipeline is also -- is offering significant synergies. For example, we have 4 drugs for pediatric neurology in our pipeline today, including Angelman syndrome. About to start Phase III in Alexander's disease, about -- with Phase III data this year. And then we have others for pediatric neurology kind of call point. And then in dementia. We have several programs advancing forward in dementia. Our first program is in Prion disease, which is a form of dementia, rapidly progressing neurodegenerative disease that's really a cause of -- a form of dementia. And then we have our amyloid precursor protein program that's now in Phase II development for -- in Down syndrome patients associated -- in dementia associated with Down Syndrome. And we have more dementia programs. there will always be one-off opportunities that may not be a perfect fit for some of those synergies that I described, but we are focused on building those synergies to maximize efficiency.

There's a lot of kind of going on with the commercial organization this year. But in terms of kind of early or mid-stage pipeline readouts, what would you focus investors on this year?

On the mid-stage pipeline side, we are focused, of course, on the mid-stage pipeline. We are also laser-focused on the 4 Phase III readouts that we planned for this year which represent potential near-term launches for those programs. On the mid-stage pipeline, it's going to be very prolific as well. We're expecting Phase II data from our alpha-synuclein program for multiple system atrophy, a very aggressive form, if you will, a movement disorder, Parkinson's disease. Proof of concept could lead to a Phase III triggering for that program. That's wholly owned, by the way. And then our polycythemia vera drug, sapablursen. We're planning to present and get out their Phase II data for that program, which also would trigger, if positive, a decision to go to Phase III development. We -- as I mentioned in my prepared remarks, we're also expecting some initial proof-of-concept data from our first clinic -- Ionis-discovered, using Ionis chemistry, siRNA program in the clinic, to validate our approach to siRNA drug development, and also our first MsPA backbone chemistry using our MsPA backbone chemistry in the APP Down syndrome study this year as well. There could be more. Some of these studies are enrolling now. So it's difficult to project whether they'll complete enrollment. And they'll have data in time. But that, certainly, it's going to be an exciting year for the mid-stage pipeline as it will be for the Phase III pipeline as well.