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

Good afternoon, everyone. My name is Gena Wang. I'm a SMID cap biotech analyst at the Barclays. Welcome to Barclays 27th Global Healthcare Conference. I always was in Miami. I know this year becomes a little more crowded. It is my great pleasure to introduce our next presenting company, Ionis Pharmaceuticals. With me on the stage is Beth Hougen, EVP and Chief Financial Officer. Thank you, Beth. So maybe do you want to give a very quick overview before we dive into the questions.

Sure, happy to. Thank you for having us, Gena. We're glad to be here. I think this -- what I would have people sort of focus on for Ionis is this is a really exciting time for the company. We have spent the last several years transitioning into a fully integrated commercial stage company and we're there today with the approval and launch of TRYNGOLZA for a rare disease population of -- with FCS, which is basically very severe high triglycerides. That's our first independent launch in the U.S. It's going very well. In the next 1.5 years, we anticipate having 3 more independent launches starting with the next step, our donidalorsen for HAE, severe high triglycerides as well coming with olezarsen next year, assuming positive Phase III data later this year. And then zilganersen, which is a rare CNS disease, and that data is expected later this year with a potential approval next year and launch as well. So lots of excitement at the company as we have built a very integrated commercial organization, and we're launching our medicines. And in addition, though, our partner pipeline continues to be very rich and delivering as well. So we're looking forward to 4 key launches from partnered programs in the next 3 years, and that includes pelacarsen for LP(a)-driven cardiovascular disease, eplontersen for ATTR cardiomyopathy, bepirovirsen for HBV and sefaxersen for IgA nephropathy. So lots of excitement around the company as we bring our own drugs to the market. And as we add partnered medicines to SPINRAZA, QALSODY and WAINUA that's on the market for polyneuropathy right now.

That's great. I think that before even going to the other programs, I do want to ask you about the Ona deal that you just announced yesterday. So maybe give us a little bit more color regarding the deals and why this is done. And I know some investor views are very favorable in terms of upfront payment and the milestone. And so maybe walk us through maybe a little bit high level on the Ono deal.

Yes, happy to. Glad that we could be here to talk a little bit about that transaction. For those of you, just to give you a sense, we partnered our sapablursen in -- which is a TMPRSS6 inhibitor for polycythemia vera, we partnered that with Ona Pharmaceuticals and announced that transaction after market closed yesterday. The upfront payment, as Gena mentioned, was $280 million. There's $660 million worth of development, regulatory and commercial milestones, as well as royalties in the mid-teens. This is a patient population that's in need of new therapies. The existing therapy is really not doing these patients real justice, frankly. And so we're excited that we were able to partner this. And for 2 reasons. One is that we're really focused in neurology and cardiology. We believe that that's where our competitive advantage is. We've seen that particularly in neurology with SPINRAZA with QALSODY, with WAINUA for polyneuropathy. And we're going to continue to build that wholly owned pipeline. And we're also very deeply in the cardiology space, and we'll continue to build that wholly owned pipeline as well. So with sapablursen being in the hem/onc space, it really made more sense for us to partner that for real -- to really maximize the potential of that drug There's, I think, 100,000 patients in the United States in need of that therapy, and that's just U.S. only. So there's a tremendous market opportunity, and we believe that sapablursen can be very competitive. We're running an open-label Phase II study right now. We ran a very competitive space in the partnering transaction and that -- those competitors, who are in the partnering transaction discussions with us, did have the ability to see some of those data. So they have a sense of how sapablursen is performing in that patient population. And I think that speaks to the very attractive economics that we were able to command for this drug. It's also very important for Ionis to add that $280 million to our balance sheet. We have a healthy balance sheet today. We ended 2024 with $2.3 billion in cash. And this just adds to that healthy balance sheet and gives us more firepower to really focus on our wholly owned pipeline, particularly as we look at revenue growth for our existing products. WAINUA, TRYNGOLZA and as we look ready to -- look to begin bringing donidalorsen and olezarsen to market in the next very short while. So a lot going on at the company, and this gives us additional firepower to be able to execute on all of those plans.

So the milestone $660 million is mainly the back-end loaded? Or you do have multiple development regulatory sales?

Yes. There are development and regulatory. So we can anticipate seeing some of those milestones in the near term. Ona will be fully responsible for operationalizing and financing the Phase III program. It will be on their expense books, if you will, on their P&L. So that helps a lot. And then we'll earn those additional milestones as they advance through Phase III development and through regulatory process to the market.

Okay. And the mid-teen royalty, that's just fixed?

It's a fixed. Yes, exactly. Yes.

So I go back to your TRYNGOLZA launch preparation, the investors are more excited about the sHTG opportunity there. And you will have 2 studies, so data expected second half this year. So maybe give us a little bit thoughts on the study design of the expectation there and what endpoint will matter most for the commercial perspective.

Right. So to your point, olezarsen, which is TRYNGOLZA for FCS, is in the Phase III program right now for severe high triglycerides. So those are patients who have triglyceride levels that are 500 mgs per deciliter and up. And many of these patients have triglyceride levels that are 880 mgs per deciliter and higher. And the higher you go, particularly from 880 mgs per deciliter and above, the greater the risk of acute pancreatitis. So -- and that is a potentially fatal very painful, very debilitating symptom of having very, very high triglycerides. So olezarsen is in Phase III development for that very broad patient population. We're actually [indiscernible] those studies. We're also running a supportive safety study. So 3 Phase III studies, all 3 of which will read out here this year. The ESSENCE study is the supportive safety study. That's about 1,400 patients and the primary endpoint is triglyceride lowering. It's not in our commercial patient population. So those are patients in the ESSENCE study who have triglyceride levels in the 150 mgs per deciliter to 500 mgs per deciliter range. And the reason for picking that range of TG levels is because it's a patient population that's very, very large and we were able to enroll the study fairly quickly, which was important for us. It's just the safety study. That data will be available mid this year, and we'll probably be putting out a top line press release and we're looking forward to that coming first. In the second half of this year, we'll be reporting the CORE and CORE2, which are the pivotal and the confirmatory pivotal studies in the commercial patient population. So those are patients who have triglyceride levels that are 500 mgs per deciliter or higher. And they have -- in some cases, some of these patients will have a history of acute pancreatitis as well. So we're looking forward to presenting the data and reporting the data for CORE and CORE2. We'll report that data out at the same time. Those studies are concluding about the same time. So that works out very well. And we'll be able to report data independently for each of the studies and also pooled and that's going to be very important, particularly as we think about acute pancreatitis, which while it's not a pivotal endpoint, it's a very important secondary endpoint for these 2 studies. We believe that the ability to show at least some trends in acute pancreatitis attack reductions is going to be meaningful for physicians as they look to treat their patients with severe high triglycerides. As a reminder for folks, we did see a very substantial reduction of 88% in acute pancreatitis attacks in our Phase III BALANCE study in the FCS patient population. And we believe that, that gives us even greater confidence that we'll be able to see at least trends in the CORE and CORE2 studies for acute pancreatitis. So that will be very important for us to see.

Okay. And the full triglyceride reduction. So what is the threshold you were thinking in order to hit the step?

So in the FCS Phase III study, we had triglyceride lowering of about, call it, 59% placebo adjusted. And that's really important. You want to ensure that you're looking at placebo adjusted when you look at these statistics. So consider that 59%. Now the interesting thing with FCS is these patients have very, very high triglyceride levels. I think baseline in our Phase III study was somewhere in the sort of 2,300 mgs per deciliter to 2,500 mgs per deciliter range. So very, very high triglyceride levels. So being able to get them down 60% almost is very, very important and very meaningful for these patients. Interestingly enough, they only have one mechanism for clearing triglycerides. So that effectively reduces the ability to down your triglycerides, whereas the severe high triglyceride patients actually have 2 mechanisms for clearing TGs. And so that gives us confidence that we should see at least the same level of TG lowering in our Phase III studies in severe high triglyceride patients as what we saw in the FCS study and potentially higher and that will be very meaningful for these patients as well.

Great. And for the acute pancreatitis, so you say you hopefully will show maybe similar level. Like you look -- when the study was a power, do you think that you were hoping, based on the powering do you think that they could have a chance to hit a step?

So we didn't power the Phase III studies for acute pancreatitis. Frankly, we didn't power the FCS Phase III study for acute pancreatitis either, and we're able to see a very significant reduction in that patient population. So even though it's not powered for that, we do anticipate, given the success that we had with FCS that we'll be able to see similar success in the severe high triglyceride patient population and in these Phase III studies. So we're looking forward to those data. And as I said, even trends are going to be very, very important. Because what we know with severe high triglycerides is that the higher your triglycerides, the greater the risk of acute pancreatitis. And we also know that if you've had 1 attack of AP that you're at a much greater risk of a subsequent attacks. And that's -- these attacks could be fatal. They put patients in the hospital for days on end and that's -- and it's -- they always feel their disease. They've got severe abdominal pain, they'll be in the ER for pain fairly frequently. And it's a true burden on their lives and on the health care system. So we think that even with trends it will be very important for the commercial opportunity for this drug. Now commercially, we see olezarsen for severe high triglycerides as a potential blockbuster opportunity. If we see something more than trends in acute pancreatitis, that opportunity could actually grow beyond that $1 billion range and could actually be a multibillion-dollar opportunity. So -- we're very much looking forward to releasing these studies out a little bit later this year.

Okay. Good. Quickly on the ESSENCE study that you said top line mid-'25. So what kind of safety profile you think consider as a good safety profile? And what kind of a measurement could trigger some concern?

Well, our -- this is a LICA drug, which is our sort of advanced generation chemistries that we've been using for our liver targeted drugs. And very much like WAINUA, we've seen olezarsen safety profile in FCS. We've seen the safety profile for donidalorsen, it's under review right now. And everything we've seen is very clean. We've got very, very strong favorable safety and tolerability profile, and we would expect to see something very similar in the ESSENCE study as well. So nothing -- we're not anticipating anything of concern.

Okay. Good. Now I'll switch to your donidalorsen in HAE, which should also have a drug approval soon. And then so maybe the given the drug profile Q8 weeks and the Q4 weeks, do you expect both in the label? And then how do you think that the commercial opportunity would look like?

Yes. So donidalorsen, just to sort of level set for folks, donidalorsen is under review in the U.S. and in Europe for HAE. And we've demonstrated very, very favorable data in our Phase III studies. We ran a very interesting Phase III program at large. So let me maybe take a minute and explain that to you and to the folks. The thing about HAE is if you had asked me several years ago, if this was a market where patients would switch off of their current therapies, I would have said no. I think the general belief was that it was a very sticky market and the market leader was dominating. Since then, however, a new product has come to market an oral, and that product has actually done extremely well and has grown sales year-over-year. And what that demonstrates to us is that there is a -- that's very important for these patients to have strong efficacy, a tolerable drug, one that they can take and also to have convenience. And we believe that donidalorsen is actually going to be able to provide all 3 of those attributes in 1 drug. There's not a drug on the market today. that offers all 3 of those attributes in a single drug. And that gets to your question about Q4 week versus Q8 week. Our Phase III study evaluated donidalorsen on basically a monthly dosing or a bimonthly dosing schedule. In both of those dosing regimens, we saw substantial reductions in attacks of HAE. And recently, we reported data at the Quad AAAAI conference in San Diego right by our home base. And in those data, what we showed was that we reduced attacks by 96% in the 4-week as well as the 8-week dosing cohort. So that says to us that both of those are going to be very attractive for patients. We filed the data for both of those dosing regimens with the FDA and with the EMA and we anticipate getting both of those in our label. And I think that both will be well received commercially. Our belief is that much like the standard of care injectable that folks will start with the Q4 week, just as they start with the Q2 week on the standard of care injectable. And then if they're well controlled, they'll move over to the Q8 week and hopefully be able to stay there. So we think that, that dynamic is likely going to play out in the market. And having both of those dosing regimens available for patients, I think it's effectively shifting the entire paradigm of treatment for these patients.

And regarding the pricing, is it fair to assume that will be largely comparable to the other drugs out there, roughly $0.5 million per year?

Yes. I think it's fair to assume parity. We're still doing all of our payer research as we approach the PDUFA date in the -- at the end of August. But parity is, I think, a reasonable expectation, particularly given the strong clinical profile that we've demonstrated in the Phase III study, including the data from a Swith study that we think is going to be very important as we bring this product to market.

And total market opportunity, if we're using BioCryst, they did guided $1 billion and $800 million in the U.S. Do you think that similar to your goal? Or you think it will do better?

We'd love to be in those ranges. We've been guiding to about $0.5 billion opportunity I think the profile that we've demonstrated is, as I said, I think it's very favorable for folks. As we think about this market, it is a competitive market. It is absolutely a switch market in the United States. About 70%, 75% of the U.S. patient population are on an existing therapy. We know that about 20% to 25% of those patients switch between therapies on an annual basis. So our focus is going to be on really addressing those patients who are currently treated with donidalorsen. That will be our primary focus. And as I said, we ran a prospective Switch study, which no 1 else has ever done in this space. And the data from that Switch study told us a few things. One, it told us that while these patients believe they were well controlled on their existing therapy, when we move them over to donidalorsen, they saw an incremental 64% reduction in attacks on donidalorsen, that's a significant improvement in attack rate reduction for these patients. We also spoke to these individuals and surveyed them when they finished the SWITCH study and asked them their preference and more than 80% of the patients who switched over to donidalorsen in the study indicated a preference for donidalorsen and remain on donidalorsen today. Interestingly, the patients who are on the oral actually preferred donidalorsen and about 70%, 75% of the patients who are on the standard of care injectable preferred donidalorsen. So very strong preference data that we're going to be able to use in the market as we come forward after hopefully, approval in August.

That's great. the remaining few minutes, I do wanted to ask, you have too many pipelines.

That's a high-quality problem.

WAINUA and also the Angelman program, right? So we did see you have pretty good growth in the polyneuropathy last quarter, quarter-over-quarter, it's a pretty high growth. And how do you see in the 2025 the polyneuropathy, the market, like how much growth do you think you expect to see the trajectory wise? And I think that we know that Alnylam reported $1.22 billion in the polyneuropaty market. And where do you see -- where you go, because the drug just recently received approval right? So maybe like where do you see the opportunity here? And also the ATTR cardiomyopathy, a much bigger market opportunity?

Yes. WAINUA -- as Gena mentioned, WAINUA was approved a year or so ago now for ATTR polyneuropathy and our -- we have a co-commercialization agreement with AstraZeneca. They lead the field efforts with WAINUA and we launched WAINUA just a little bit more than a year ago now as we sit here in mid-March. WAINUA has demonstrated very, very favorable metrics in the early days of its launch. We saw last year accelerating sequential growth. So in other words, quarter-over-quarter growth that was growing each quarter. And in the fourth quarter over the third quarter, we nearly doubled revenues in the polyneuropathy space. And I think very interestingly, if you look at the growth in polyneuropathy across the 3 drugs that are in that space, there was a $37 million increase in revenues between Q3 and Q4. In the U.S. market, which is the 0only place WAINUA was approved last year, WAINUA captured more than 50% of that growth quarter-over-quarter. And so you can see that we're really gaining ground in the polyneuropathy space on the existing therapies. So we believe that, that will continue this year. We're excited by the dynamics that we're seeing in the launch and the metrics that we're seeing, all are pointing very favorably to WAINUA and we anticipate that with positive data in the CARDIO-TTRansform study in cardiomyopathy in the second half of 2026 that we'll be able to continue delivering WAINUA to these patients. And we and AstraZeneca believe that WAINUA could be a $5-plus billion revenue opportunity in ATTR broadly across both indications, and we also believe that it could be the silencer of choice for these patients.

So Beth, just quickly, I just hear you saying second half '26.

Second half of '26.

So is that because monitoring the blinded events that make it a little bit delayed?

So it's a 140 week study, and we've decided to take that study all the way out to its full 140 weeks. After seeing the HELIOS-B data last year, we and AstraZeneca made the decision that taking the study to its natural conclusion. gave it the greatest opportunity, gave the drug the greatest opportunity to demonstrate differentiating data. And that we felt was very important as we go into this very, very large and growing market.

Okay. Good. I know we are running out of time, I will ask other pipelines have a difference.

Okay. Looking forward to it.

Yes. Thank you so much.

Thank you. Appreciate it.